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Gauging the Exposure to Transition Risks of Colombian Insurers’ Investment Portfolios

This study presents the results of a climate scenario analysis conducted on insurers’ investment portfolio, carried out by 2 Degrees Investing Initiative and FASECOLDA, the Colombian Insurers Federation.

The results shown in this study will allow one to understand if the insurers’ financial portfolios are potentially exposed to transition risks arising from a disruptive transition and to identify potential avenues for risk mitigation.
This is the first exercise of its kind in Latin America and the second in the world with a sector association.

Key findings:

  • Colombian insurers are significantly exposed to transition-relevant sectors, which cover up to 46% of the AuM of the listed equity and corporate bond portfolios
  • Overall, the scenario analysis results are relatively positive: for example, results for the oil & gas, hydropower, and gas-based power of the corporate bond portfolio are compatible with a 2°C scenario
  • However, the insurers’ portfolios still face potential exposure to risks arising from a disruptive transition that will need to be mitigated, due to their investments in oil, coal-based power, and certain auto companies

 

Funding information: This report has received funding from the International Climate Initiative of the German Ministry of Environment and the Inter-American Development Bank.