It is impossible to resist. A friend of mine is invested in pipelines with yields of 8%. Prices are low and hard to knock down in a market pullback.
The K-1’s involved with MLP’s are a pain. I can easily resist.
2 Likes
No K-1s if you hold the MLP in an IRA, but watch out, because there is a limit to the amount of tax-free distributions you can receive.
Steve
Yep $1000 good luck.
1 Like
Which is their weight in the S&P 500 index.
As the energy sector percentage has decreased from 6% to 4%. Index flows have gone to, for example, information technology which has more than doubled in the 10 years (11% to 27%).
DB2
1 Like
If the insurance companies boycotted oil companies, states, and, now, the federal government, may sanction them for the thought crime of “woke”, the same way some companies have been sanctioned for having ESG policies.
Steve
I don’t know about insurance companies, but Vanguard and all the index ETFs would be out of compliance.
DB2
They do so at their risk.
Speaking of climate change:
1 Like
Maybe it would be clearer to look at the overall trend of the past 25 years. Wasn’t the range during the first half of that about 10-15% of insurers’ portfolios? Isn’t the range of the past 10 years in the 4-6%?
Also, renewables are about double that size now (8-12% range), right?
Pete
2 Likes
This is how we lose our freedom of speech and the facts of science. Climate Change is a scientific fact.
Climate Change is accelerating and causing stronger storms and hurricanes, larger rainfalls or no rainfalls, more flooding, more forest fires, accelerating melting of the polar ice and glaciers and many other climate changes due mostly to the burning of fossil fuels (oil, gas and coal) which are heating up the earth’s temperature.
Jaak
Climate change will not wait for these small steps in decreasing use of fossil fuels. The world is on a dangerous path to massive destruction of life on earth due the increasing temperatures on earth.
There aren’t many renewable energy stocks in the S&P500. The largest would be GEV in the utility sector.
In general, renewable stocks have been terrible holdings over the last five years. For example, FAN is down 3% and TAN lost 10% while SPY is up about 85%. The XLE gained 78%.
DB2
Hopefully the insurance companies didn’t invest much in Orsted.
Orsted replaces CEO as offshore wind industry struggles
https://www.reuters.com/business/energy/orsted-ousts-ceo-appoints-company-insider-new-boss-2025-01-31/
Orsted Chief Executive Mads Nipper will step down to be replaced by company insider Rasmus Errboe, the world’s biggest offshore wind developer said on Friday, as it seeks to arrest an 83% slump in its share price since its 2021 peak.
DB2
You forgot Tesla, NextEra Energy, Iberdrola, Vestas, Brookfield Renewable, and First Solar in the renewable stocks.
Most renewable energy stocks are divisions of major companies like GE Vernova, Southern Company, NRG Energy, Constellation Energy, etc.
https://www.morningstar.com/stocks/investment-opportunities-us-renewable-energy
2 Likes
Insurance companies have become some of the biggest financiers of fossil fuels, which are the primary cause of climate change — the extraction and burning of oil, gas and coal are responsible for over 75% of greenhouse gas emissions and nearly 90% of carbon dioxide emissions.
Fossil fuel companies made up 4.4% of the investment portfolio of the insurance industry in 2023, up from 3.8% nine years earlier. Two insurance giants, Berkshire Hathaway and State Farm, increased their fossil fuel positions by around $200 billion in that period. Overall, however, more than half of the country’s 238 property and casualty insurers recently surveyed by the Wall Street Journal have reduced their investments in oil, gas and coal over the past decade. But while insurers around the world have restricted their coverage of fossil fuel projects, U.S. companies continue to write policies for conventional oil and gas projects.
By the numbers, climate change is having an enormous impact on the industry. The insured weather losses attributable to climate change have increased from 31% to 38% in the last decade, an annual increase that “significantly outpaced” the growth of losses in other sectors. Overall, about $600 billion in such losses over the last two decades can be attributed to climate change, according to a report by Insure Our Future, a global consortium of groups pushing insurance companies to stop investing in fossil fuels.
For many insurers, the losses are not being offset by the premiums they collect from their coverage of fossil fuel companies. For more than half of the 28 leading insurance companies, their estimated losses due to climate change exceeded their fossil fuel premiums. Overall, climate-attributed losses for all 28 insurers totaled $10.6 billion, erasing most of the $11.3 billion they collected in premiums from fossil fuel companies.
As a result, insurers have now dropped more than 1.9 million home insurance contracts since 2018, with nonrenewal notices tripling in more than 200 counties across the country, according to a recent congressional investigation.
Increasingly, more Americans are underinsured, making it likely that the full cost of reconstructing a house won’t be reimbursed. A University of Colorado Boulder study on the 2021 Marshall Fire, the worst in that state’s history, revealed that 74% of affected homeowners were underinsured.
That dynamic has increased pressure on insurers to shun the fossil fuel industry — both by no longer providing coverage to oil, gas and coal projects and by no longer investing in the industry. “Insurers’ self-reinforcing cycle of driving climate risks higher and restricting coverage for those risks is threatening public interest and financial stability,” warned Insure Our Future.
U.S. insurers in general continue to back the industry, and they have played a prominent role in the liquefied natural gas boom along the Gulf Coast. All of the senior lenders for the giant Rio Grande LNG terminal in Texas were insurance companies — Fidelity & Guaranty Life Insurance (F&G), Everlake Life Insurance, American General Life Insurance, Security Life of Denver Insurance, Symetra Life Insurance and Allianz Life Insurance of North America — according to an SEC filing by the developer, NextDecade. Spokespersons for the companies did not return requests for comment.
1 Like
If that is your focus, then one should concentrate on China
China unveils plan to encourage insurance funds into stock markets
https://www.reuters.com/markets/asia/china-unveils-plan-encourage-insurance-funds-into-stock-markets-2025-01-22/
DB2