Clean protection

07.04.2020 - Paper manufacturers use recycled paper, farmers use organic farming methods, energy suppliers use solar energy - there are many ways in which companies can make their products and services more sustainable. But what about insurance companies? They often invest in capital investments with high returns, but whose environmental compatibility is questionable. But it is also possible to be sustainable: in this interview, Managing Director Uwe Mahrt explains what Pangaea Life does differently to other insurers.

With recycled paper, the positive effects for the environment are obvious. The idea of sustainability is also easy to understand when it comes to green electricity or organic products. But what makes an insurance company sustainable?

The vision of our Pangaea Life brand is to work together to protect the future of people and the planet. We achieve this by doing what we do best: insuring. In Germany, "green" unit-linked pension insurance policies are usually based on eco mutual funds, which can also be bought directly on the stock exchange. In our opinion, these green funds are usually only a compromise, as these portfolios also include companies that cannot meet strict sustainability criteria. The Pangaea Life Fund, on the other hand, invests the investment contributions directly in specific renewable energy generation projects such as wind and hydroelectric power or photovoltaics in accordance with ESG criteria. ESG stands for "Environment Social Governance" and describes the integration of ecological and social aspects into corporate decisions and assessments. As the fund invests directly in renewable energies, nuclear energy, military goods, gambling, factory farming, animal testing, green genetic engineering and pornography, for example, are 100 per cent excluded.

Please give us some background information on Pangaea Life.

Pangaea Life is the sustainable brand of the insurance group die Bayerische, which has been on the market since 1858. It consists of the companies Bayerische Beamten Lebensversicherung a.G. (parent company), Neue Bayerische Beamten Lebensversicherung AG and Sachgesellschaft Bayerische Beamten Versicherung AG. The Group's total premium income amounts to around 500 million euros. The Group is continuously increasing its equity capital and is well above the industry average. Investments totalling over 4.5 billion euros are managed. More than 6,000 personal advisors are available to Bayerische customers throughout Germany. The rating agency Assekurata has once again awarded Neue Bayerische Leben a quality rating of A+ ("very good") in a recent comprehensive company analysis.

What insurance products do you offer and what characterises their sustainability?

In addition to our investment pension, we offer green liability and household contents insurance as well as motor insurance for electric or hybrid vehicles. Pangaea Life's product portfolio also includes direct insurance. The same ethical, social and ecological investment criteria apply to the investments as for the Pangaea Life fund. The policies also cover more than the standard insurance. One example of this is the Pangaea Life liability insurance, which co-insures legal liability due to ecological or social commitment.

Another example is our sustainable household contents insurance: if damaged items such as furniture, household items or carpets have to be purchased after an insured loss, we will reimburse 20 per cent more than in traditional household contents insurance if the newly purchased items come from ecologically fair production. Customers thus receive higher-quality furnishings and are committed to manufacturers of sustainable products.

On your homepage, you list four key points for sustainable behaviour and thinking: ecological responsibility, economic responsibility, the company's social standpoint and the company's social standpoint. What do these points mean and how does Pangaea Life position itself in relation to them?

With our four key points for sustainable behaviour and thinking, we are pursuing a holistic approach. In concrete terms, this means, for example, that we scrutinise all aspects of the project when making investment decisions. What if the investment project makes ecological sense, but its consequences will drive people away from their homes or represent too high an economic risk for our customers? Unfortunately, such examples are not uncommon. Instead of only taking partial aspects into account - as important as they are - we also need to be convinced by the social and economic aspects of a project. Transparency is also an important corporate value for us. Pangaea Life takes a stand on the increasingly critical questions from society: What happens to my money? How are the company's profits generated? And who am I directly or indirectly supporting with my contract? We invest specifically in carefully selected projects and are available to answer questions about the background and potential returns. On our website, we transparently disclose the projects in which we invest. This means that customers can be completely sure that not a single cent of their contributions will flow into ecologically or socially questionable projects.

The "Our supporters" section of your website lists numerous like-minded people with sustainable ventures. Why is it particularly important to form networks for sustainability issues?

A lot is happening in the field of sustainable companies at the moment. We are seeing how people in very different areas are considering how their actions can do something good for the climate and a healthy planet. And this is happening in areas that at first glance often have little to do with sustainability, as we as an insurer are proving ourselves. We follow the motto: Together we are stronger and can achieve even more. That is why we are constantly expanding our network and entering into partnerships with companies that pursue the same goal.

Sustainable products and services are sometimes somewhat more expensive than their "conventional" counterparts. Many consumers accept this and are also prepared to dig a little deeper into their pockets in favour of the environment (and/or their own wellbeing) or to receive a lower return or interest. What about your products and customers?

Sustainability doesn't always have to be more expensive. Sustainable investments can even offer higher potential returns than conventional investments, particularly in the area of retirement provision and in view of low interest rates. The Pangaea Life Investment Pension is a unit-linked pension insurance policy that combines the returns of sustainable tangible asset investments with the benefits of a lifelong pension. In other words, security, solidity and transparency are combined with uncompromising environmental awareness.

But the criterion of a strong return described at the beginning is also fulfilled. Scientific studies have shown that focussing on sustainability criteria does not necessarily have a negative impact on returns. On the contrary, the margins of wind farms or photovoltaic systems are actually increasing continuously because more and more countries are favouring an energy mix that is as green as possible. Renewable energy projects are therefore often supported and subsidised by the state.

Since the fund was launched in September 2017, the return has already reached 9.3 per cent after fund costs. Based on one year, the performance is around five per cent after fund costs, which is well above the current interest rate level. Unlike equity funds, the fund income is also not subject to the high fluctuations of the capital markets. This is because the income from the investments is secured by long-term power purchase agreements. In addition, there are no currency risks for members of the eurozone. Overall, this results in highly predictable returns. And the costs for the fund investment are also convincing. Unlike most investment funds, there is no front-end load and the annual costs are just 1.18 per cent.

In addition to the sustainable insurance business model, are you also trying to make everyday working life at Pangaea Life more sustainable?

Yes, definitely. In fact, we have already initiated quite a lot here. An important step that we are very proud of: Bayerische and its sustainable subsidiary Pangaea Life have recently become 100 per cent climate-neutral. As a climate-neutral company, Bayerische fulfils the standards certified and annually audited by TÜV Nord for offsetting the greenhouse gas emissions caused (in accordance with standard TN-CC 020 "Calculation & Verification of Carbon Footprints & Carbon Neutrality"). Bayerische offsets its_{CO2 emissions} worldwide by promoting particularly sustainable projects certified in accordance with the strict requirements of the UN Climate Change Secretariat and those of the Gold Standard (GS). In addition to reducing greenhouse gases in the atmosphere, these projects also improve the living conditions of local people. As part of this, we are supporting a forest conservation project in Kenya, a project to generate green electricity from wind energy in Turkey and a forest conservation project in Malawi. In addition, the investments made by the Pangaea Life Fund will enable us to_save around 3.5 million tonnes of climate-damaging_CO2 in the future. In cooperation with our partner WeForest, we have already planted over 14,500 trees in regions threatened by deforestation.

We also take various measures in our day-to-day work to ensure that our ecological footprint is as small as possible: we support sustainable mobility and have installed several e-fuelling stations on our company premises. We also use climate-friendly green electricity, do not use plastic packaging in our kiosk and source some of the food for our canteen from regional and organic producers. We grant our employees a travel allowance when using public transport, offer home office options and thus create incentives to leave the car at home more often. Our advertising material manufacturer is also certified and works in a climate-neutral way. With all this, we are of course aware that we are far from perfect. But if you don't set out on the journey, you will never reach your destination.

Cover picture: Die Bayerische