Sourced from the Financial Post
The Bank of Montreal has decided to exit the majority of its business that provides insurance to insurers, saying climate change is at least partly to blame.
BMO chief executive Darryl White noted during a quarterly earnings conference call on Tuesday that the lender, Canada’s fourth largest, had previously said it was reviewing ways to keep its reinsurance business more consistent.
“In light of the environment in the reinsurance sector, performance is no longer meeting our risk-return expectations, and so we’ve made the strategic decision to exit the majority of this business,” White told analysts.
BMO’s chief financial officer, Tom Flynn, added the bank had decided to wind down its property and casualty reinsurance business, saying it “reflects returns in the business coming in at a level below our expectations, and a higher level of variability in results, partially due to weather-related claims.”
Companies worldwide are grappling with similar issues. In May, the Bank of Canada identified climate change as one of the key vulnerabilities for the financial system, saying it posed “physical risks from disruptive weather events and transition risks from adapting to a lower-carbon global economy.”