Bermuda-headquartered international reinsurance company, Ariel Re, is to provide insurance to backstop comprehensive performance guarantees for recyclers owned by Ecogensus, a technology-focused provider of sustainable waste management solutions.
Ecogensus’ recyclers process solid waste into high performance biofuels.
The insurance coverage, provided by Ariel Re through its Lloyd’s Syndicate 1910, serves to backstop the performance guarantees of Ecogensus’ processing capacity and fuel specifications.
In addition to insuring the long-term performance warranty of Ecogensus, Ariel Re and the waste management firm have developed a project revenue protection program. The program is structured to support debt lenders and is based on an up-to-10-year facility level output performance warranty.
The pair explain that this program can also be combined with a facility start-up guarantee, which provides a seamless enterprise risk management solution.
Frank Petrocelli, Senior Risk Analyst, Clean Energy Risk Solutions at Ariel Re, commented: “With a growing need for advanced technology to address significant environmental issues, including methane release and ocean plastic pollution, the global market will benefit from product offerings by Ecogensus. Insurance products from strong counterparties like Ariel Re, will help to accelerate the use of these technologies.”
George Schulz, Leader Americas of Ariel Re Clean Energy Risk Solutions, said: “As the demand for sustainable waste management solutions continues to grow and project owners and investors seek support of complex performance warranties from recycling solution providers, the Ecogensus team has demonstrated a scalable waste recycling solution with a strong focus on robust and reliable performance; with open dialogue and sharing of information, it enables us to tailor a custom risk transfer solution. Ariel Re is pleased to help Ecogensus achieve its strategic growth goals.”
Bjornulf Ostvik, Founder and CEO of Ecogensus, added: “We are excited to partner with Ariel Re to provide reliability and certainty to our customers as we roll out our sustainability solutions globally. Our recycling technology offers market-leading waste processing capabilities and enables viable landfill alternatives. The Ariel Re program can enable our customers to access competitive financing solutions as they upgrade their facilities and enhance their valuations with our state-of-the-art recycling solutions.”
The interesting aspect of this arrangement for our ILS market focused readership is that it shows a segment of the market where insurance-linked returns that could be deemed ESG positive, perhaps appropriate, can be derived, outside of catastrophe and climate risk.
While unlikely a class of business for everyone, there are discussions in ILS circles around these kinds of products, in guarantees and warrantees, and if the risk is ESG positive or appropriate, that could make them even more attractive.
We expect these types of products may at least get some attention from large institutional investors looking for ESG linked and insurance-linked returns, if not too by some ILS fund managers with a remit broader than pure cat risk alone, in the future.