QBE is a significant investor and we take our responsibilities as a capital provider seriously. We aim to contribute broadly to wellbeing and sustainable development and believe that integrating principles of responsible investing into ownership and investment decision-making can have a positive impact on risk‑adjusted financial returns.
QBE has a dedicated Responsible Investments (RI) team, which reports to the Group Chief Investment Officer and the Group Chief Financial Officer. The RI team’s activities are also overseen by the Board Risk and Capital Committee and, where appropriate, the Board Investment Committee.
QBE manages assets internally and through external fund managers. In 2017, we updated our approach to incorporating ESG considerations into our internal credit selection by introducing a new independent ESG measure to our credit analysis process. This enables us to understand and monitor a company’s approach to managing ESG issues through its policies, practices and other measures. When deciding whether to appoint or allocate to an external fund manager, we also consider how much they incorporate ESG factors into their investment processes and operational areas.
In 2018, we plan to update our Responsible Investment Guidelines to further embed this approach. This aligns with our Group Credit Risk Policy and our obligations as a PRI signatory. We believe considering ESG complements our existing investment due diligence and strengthens our overall decision-making.
During 2017, we further progressed our commitment to responsible investment by joining the Responsible Investment Association Australasia and expanding the RI team. We continued to be involved in industry and government discussions to share best practice around responsible investing and contributed to a range of submissions, research papers, forums and panels.
QBE believes that buying insurance is not just about business. To help us support the communities and environment where we operate, we offer customers the chance to make a difference with their premiums.
Premiums4Good is a unique global initiative that enables a customer to use a portion of their premium to invest in securities with an additional social or environmental objective, such as social impact bonds, social bonds, green bonds and investments in infrastructure projects with environmental benefits.
This a free product feature with no risk for the customer – all the investment risk is assumed by QBE.
Premiums4Good was launched at Lloyd’s of London in March 2015. It is now offered to selected customers of our North American, European and Australian & New Zealand Operations. Through this initiative, we are stimulating the development of new investment products that offer appropriate risk‑adjusted returns, as well as supporting beneficial social outcomes.
QBE is transparent about our commitment to invest in line with the Premiums4Good mandate and work with the Classifications of Social Investments Committee (COSI) to support its governance. The independent Committee comprises three QBE representatives and three independent impact experts. They classify and review investments for an ‘additional social or environmental objective’ and verify their positive impact. The Committee continues to support QBE in iterating and improving the approach we take to classifying investments by level of impact.
Our Premiums4Good offering continued to grow in 2017, with the number of investments increasing to 26, representing an investment of $455M in qualifying securities.
In 2017, Premiums4Good made a difference to communities and the environment through insurance premiums.
that meet QBE’s investment and impact criteria
from 16 in 2016
We reviewed our Premiums4Good impact areas in 2017 in the context of the United Nations Sustainable Development Goals (SDGs). We plan to help customers align their involvement in Premiums4Good with their commitment to the SDGs.
Premiums4Good won two awards in 2017: the British Insurance Awards – Business Sustainability/Corporate Social Responsibility Initiative of the Year and The International CSR Excellence Awards Winner 2017.
British Insurance Awards – Business Sustainability/Corporate Social Responsibility Initiative of the Year
The International CSR Excellence Awards Winner 2017
Social impact bonds
Social investment seeks both a social and a financial return, and QBE supports this approach as a means of attracting more capital to global social and environmental issues.
Social impact bonds (SIBs) – known in the United States (US) as pay-for-success (PFS) contracts – are an important part of our Premiums4Good investment portfolio because they are a high-impact, results‑based investment.
In 2014, we announced QBE’s intention to invest up to $100 million in suitable SIB opportunities across our global investment portfolio. Since then, we have built relationships and investment in multiple SIBs and PFS projects in Australia, Canada, the US and the UK. Our current SIB investments cover longer-term social projects ranging from three to eight years and at various stages from launch to maturity.
We aim to bring commercial rigour to these types of investments and to help develop the market across our multiple jurisdictions through portfolio investment activities, customer initiatives and advocacy.
If QBE’s current SIB investments achieve their expected impact, they will reach more than 11,000 people, including 4,000 who will benefit from intensive social program support.
What are social impact bonds?
SIBs are innovative public-private-social sector partnerships that allow private investors to provide upfront capital for public projects that deliver social and environmental outcomes. The project results are measured and investors are repaid by the commissioner of the bond (typically government), with capital plus interest. SIBs typically raise capital for intensive support and preventative projects that address areas of social need.
Connecticut Family Stability PFS Project, USA
The Connecticut Family Stability PFS Project supports families struggling with substance use. A partnership between the Department of Children and Families (DCF), Yale Child Study Center’s Family-Based Recovery, and Social Finance, it promotes family stability and works to reduce parental substance use for DCF-involved families throughout Connecticut.
The project builds on a successful and intensive home-based treatment program. Through PFS, the Family-Based Recovery program is being extended to around 500 additional Connecticut families over four and a half years, with support from partners that include QBE. For an average of six months, enrolled families receive services focused on understanding and responding to a child’s developmental needs and treating parental substance use. This helps reduce the rate at which children are removed from home and the rate of DCF re-referrals.
Funders will be repaid based on the initiative’s success. Factors include successful enrolment in the program, reduction in substance use, reduction in re-referrals to DCF and the prevention of out-of-home placements of children.
Community Hypertension Prevention Initiative, Canada
Canada’s first health-related PFS program, the Heart and Stroke Foundation’s Community Hypertension Prevention Initiative (CHPI) is designed to reduce hypertension (high blood pressure). This affects around six million Canadians aged between 20 and 79 and is a key factor in heart disease and strokes, which kill around 66,000 Canadians a year.
Thanks to a partnership between the Public Health Agency of Canada and private investors including QBE, through the MaRS Centre for Impact Investing, the CHPI will roll out a program in 2018 that includes free screening and enrolment.
The program aims to raise awareness of, and screen for, pre-hypertension in over 30,000 people and to teach participants about the risks of hypertension and the need for healthy behaviour. Based on the number of participants, it will be one of the largest PFS projects in the world to date.
“This was the first deal that sought to tackle a health issue with an investment approach in Canada. It was important for the project team to find investors fully aligned to the ethos of the innovation. QBE’s contribution strengthened the rigour of this first-of-its-kind deal, a value significantly greater than simply funding a cheque.”
Adam Jagelewski, Director
MaRS Centre for Impact Investing