UK- Specialist insurer UIA has appointed Morley Fund Management to run its entire general insurance and life funds of £90m on a socially responsible basis.
The mandate will be run on a balanced approach that includes bonds and global equities. Claire Brook, director of SRI at Morley, and nine managers and analysts will manage the assets.
UIA decided to adopt a socially responsible approach largely due to its clients’ values. Finance director Andrew Gay says: “our customers, who include trade unions and not for profit organisations, are increasingly aware of the power of financial markets to address the environmental and social impact of companies.
“These organisations understand that their sizable funds can be mobilised behind social justice issues such as employment practices and human rights.”
Morley’s head of business development Paul Moody says the emphasis is on what he calls societal issues- health and safety at work, human rights and employment practice- opposed to environmental matters.
Morley will run UIA’s assets against mainstream indices and will aim for a tracking error near 3% and an annual outperformance target of 1% over rolling three year periods.
Companies associated with tobacco, arms and nuclear power will be excluded although oil companies are to be included as a means of curbing tracking error.
In contrast, Morley will avoid companies associated with PFI projects, or private financing initiatives, an approach many unions view with great suspicion.
At £90m, the appointment is believed to represent one of the largest individual SRI mandates in the UK.
Moody said: “companies who conduct their business in a socially responsible manner are most likely to succeed over time. By investing in those companies and by encouraging others to improve, we can benefit UIA customers both in terms of meeting fiduciary duties and addressing social and environmental issues.”
London-based Morley is a wholly-owned subsidiary of the UK’s largest insurance group CGNU and has £107bn in assets.