BEST’S COUNTRY RISK REPORT

Colombia
CRT-4 Economic Risk Political Risk Financial System Risk
August 22, 2019
Region: Latin America Country Risk Tier 1 (CRT-1) Very Low Level of Country Risk

Country Risk Criteria Procedures Country Risk Tier 2 (CRT-2) Low Level of Country Risk
Guide to Best’s Country Risk Tiers Country Risk Tier 3 (CRT-3) Moderate Level of Country Risk
• The Country Risk Tier (CRT) reflects AM Best’s
Country Risk Tier 4 (CRT-4) High Level of Country Risk
assessment of three categories of risk: Economic, Political,
and Financial System Risk. Country Risk Tier 5 (CRT-5) Very High Level of Country Risk

• Colombia, a CRT-4 country, has moderate levels of

economic risk and financial system risk, a high level of
political risk.
• GDP growth in 2018 was 2.7%, driven by a recovery in
investments and an increase in private consumption.
Inflation was contained at 3.2% in 2018 and is expected to
remain around 3.0% over the medium term.
• The map depicts the countries AM Best evaluates in
Central America, South America and the Caribbean. The
majority of Latin American countries are categorized as
CRT-4 or CRT-5, with the exceptions of Chile CRT-2,
Mexico CRT-3, and Peru CRT-3.
Regional Summary: Latin America
• Economic growth has slowed in Argentina, Mexico and
Brazil—some of the region’s major economies—due
to escalating trade tensions and volatile currency and
commodity markets. The impact of these factors will be
amplified by country-specific vulnerabilities. Additionally,
the potential for stricter trade protectionist policies brings
uncertainty to the growth outlook.
• Modest growth and tame inflation levels has allowed
several of the region’s central banks to hold interest rates at
relatively
Canada low levels—the notable exception being Mexico’s Greenland
Iceland

central bank, which has kept interest rates elevated on

concerns over inflation and currency weakness.
Vital Statistics 2018
Nominal GDP USD bn 333.11 • Structural reforms are needed to diminish reliance on Isle of Man

Population mil 49.8 unsustainable social programs and the resulting higher Ireland

GDP Per Capita USD 6,684 levels of public debt. Debt reform is also needed, to address
Unite
Kingd

Real GDP Growth % 2.7 growing corruption and its effects on economic potential. Guernsey

Jersey

Inflation Rate % 3.2

United Nations Estimates
• The ongoing humanitarian crisis in Venezuela has seen
Literacy Rate % 94.2
a significant outflow of refugees seeking asylum in Spain
United States
neighboring countries, which has the potential to strain
Portugal
Azores

Urbanization % 80.4 Gibraltar

Dependency Ratio % 45.2 resources in neighboring host countries.

Morocco
Canary

Life Expectancy Years 74.6 Islands

Median Age Years 30.1 Mexico

Bahamas
Western Sahara
(Occupied by Morocco)

Insurance Statistics Cayman Islands

Cuba Dominican
Republic
British
Virgin
Islands

Mauritania
Puerto Anguilla
Haiti
Mal
Rico

Financial Superintendency of
St. Maarten
Belize Jamaica Antigua & Barbuda
St Kitts & Nevis

Insurance Regulator
Honduras
Dominica Cape Verde
Senegal

Colombia Guatemala
El Salvador Nicaragua St Vincent & the Grenadines St Lucia
Curacao
Grenada
Barbados
Gambia

Guinea-Bissau
Burk
Fa
Costa Rica Trinidad & Guinea
Premiums Written (Life) USD mil 2,871
Panama Tobago Gha
Sierra Cote d'Ivoire
Venezuela Guyana
Suriname
Leone

French
Premiums Written (Non-Life) USD mil 5,939
Liberia
Colombia Guiana

Premiums Growth (2017 - 2018) % 12.8 Ecuador Sao T

Regional Comparison
Country Risk Tier Brazil
Colombia CRT-4 Peru

Argentina CRT-5 Bolivia

Brazil CRT-4 Paraguay

Chile CRT-2 Chile

Peru CRT-3 Argentina
Venezuela CRT-5
Uruguay

Source: IMF, UN, Swiss Re, Axco and AM Best

Copyright © 2019 A.M. Best Company, Inc. and/or its affiliates. All rights reserved. No part of this report or document may be reproduced,
Falkland Islands
distributed, or stored in a database or retrieval system, or transmitted in any form or by any means without the prior written permission of the AMGeorgia
South Best
Company. While the data in this report or document was obtained from sources believed to be reliable, its accuracyTierra
is not
Delguaranteed.
Fuego For additional
details, refer to our Terms of Use available at AM Best website: www.ambest.com/terms.
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Colombia
BEST’S COUNTRY RISK REPORT

Economic Growth (%) Economic Risk: Moderate

8
Real GDP CPI Inflation • Colombia’s heavy reliance on exports of energy and
7 minerals makes it vulnerable to shifts in global commodity
prices and demand conditions.
6
• President Iván Duque Márquez signed a new National
5 Development plan in May 2019. The new plan highlights
the government’s commitment to expanding the extractive
4
sectors (mining, oil, and gas), and provides incentives to
3 develop other sectors such as textiles. Increased public
and private investment in housing, education, and health is
2
also part of the plan.
1 • The country’s many free trade agreements will continue to
promote trade and economic integration.
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
• Unemployment rates hit a five-year high in January 2019,
Source: IMF World Economic Outlook and AM Best
reaching over 12%. The increase is due partly to the
growing influx of Venezuelan refugees, but Colombia has
historically had some of the highest unemployment rates in
Latin America.
Political Risk Summary
Score 1 (best) to 5 (worst)
Political Risk: High
World Average International Transactions • Duque became president on August 7, 2018, replacing
Colombia Policy
5 Juan Manuel Santos. The government under Duque is
expected to remain stable in 2019. However, he does
Legal System 4 Monetary Policy
not have a majority governing coalition, which will make
3
passing certain legislation difficult. This has led to
2 compromises on key legislative initiatives.
1
Regional Stability Fiscal Policy
• High levels of judicial intervention owing to environmental
0 concerns, particularly in the extractive industries, continue
to hinder project implementation. Legal uncertainties and
inconsistent regulations create difficulties for business
Social Stability Business Environment operations.
• The judiciary is relatively independent and perceived as
Government Stability Labor Flexibility
less corrupt than other institutions, but legal processes are
highly inefficient.
Source: AM Best
• While Colombia scores relatively well in the most recent
World Bank’s Ease of Doing Business survey, the
country does need to make improvements to its operating
environment. Colombia scores poorly in the categories of
GDP Per Capita and Population enforcing contracts and paying taxes.
18,000 GDP Per Capita Population 250

16,000
Financial System Risk: Moderate
14,000
200 • The Financial Superintendency of Colombia is responsible
for supervising the insurance sector.
12,000

150
• The IMF has recommended continued advances in
10,000 financial supervision and regulation. Columbia has taken
Millions
USD

steps to align its regulations with Basel III standards

8,000
100 over time. Additionally, financial system strength
6,000 will be improved through the implementation of the
Conglomerates Law. The IMF also noted the need for
4,000
50 continued reform implementation.
2,000
• The country’s corporate tax policy was changed in
0 0 December of 2018, introducing a gradual reduction in
Colombia Argentina Brazil Chile Peru Venezuela
corporate tax rates from 33% to 32% by 2020, and then to
Source: IMF and AM Best 30% by 2022.

Page 2 of 2 August 22, 2019

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