Across the world, it has been an extremely challenging start to 2020. As the Covid-19 pandemic has developed, there has been a substantial impact on the global economy, and no industry is immune to that.
As you will all be aware, many nations have implemented travel restrictions and encouraged social distancing. Many renewable energy OEMs have shut down manufacturing facilities or are limiting operations in accordance with these measures, and asset owners are having to restrict on-site activity only to what is ‘essential’.
At GCube, we are actively monitoring the situation and are in constant communication with our insureds to limit the impact of business interruption and greater pressure on supply chains for operational and construction projects. We are continuing to support the industry at full strength throughout this period – you can read about our remote working practices here.
Despite all of this, it is clear that the renewable energy sector is responding admirably, demonstrating its resilience worldwide, and fulfilling its role as an essential part of the energy grid. Data from China showed that, at the height of the epidemic in January and February, solar generation – with its zero marginal cost – was up by 12% year-on-year, while conventional sources all dropped.
The renewables industry cannot let Covid-19 impact the energy transition. Indeed, for many investors seeking stable returns amidst current volatility, renewable energy infrastructure is going to remain a highly attractive proposition, so long as we can collectively weather short-term disruption.
At the start of April, we hosted the first in a new series of webinars for our insureds, looking at how the US renewables market can do just that – if you missed it, we encourage you to watch the full webinar here, and keep an eye out for future digital events.
On our side, we are not letting the pandemic impact our plans to further enhance the resilience of our business. Earlier this year, we signed a definitive agreement for GCube to be strategically acquired by Tokio Marine HCC (TMHCC), a member of the Tokio Marine Group, a premier global company founded in 1879 with a market capitalization of $39 billion as of December 31, 2019. Subject to regulatory approval, the deal will close by the end of Q2.
Headquartered in Houston, Texas, TMHCC is a leading specialty insurance group with offices in the United States, Mexico, the United Kingdom and Continental Europe. TMHCC has been underwriting energy related business for more than twenty years and has been a capacity provider for GCube throughout much of this period. The two teams already have a strong, long-standing working relationship and the acquisition forms a natural next step for us both.
TMHCC and GCube are aligned in promoting and championing the creation of a sustainable future through the work undertaken each and every day. The acquisition of GCube underlines the increased focus that TMHCC now wishes to make within the global renewable energy insurance markets.
With deep expertise in its selected lines of business, its unparalleled track record and its solid balance sheet, TMHCC evaluates and manages risk like no one else in the industry. This financial strength and security will help GCube’s underwriting business thrive in an increasingly uncertain market.
What we have now is a very clear roadmap, which is already underway, to invest in our underwriting, our claims, and our operational teams in each of our offices. We will be working closely with all of you throughout this process.
Enjoy this edition, keep up the good work, and I will be sure to update you with our continued activity in the coming year.