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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.

Key Findings

1

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

2

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

3

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

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.

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