Clarification on the definition of a financial institution


One of the definitions of financial institutions under SBTi is 5% or more of revenues from: “Insurance companies (when functioning asset managers)”. I am confused by the clarification in parentheses. Is SBTi saying that insurance companies are only defined as FI’s when the company functions as an asset manager for its investments?

An example: Many insurance companies have significant investment portfolios that would put them above the 5% threshold, but they rely solely on 3rd party asset managers to balance and maintain the portfolio. Would these insurance companies be considered FI’s given that they are not functioning as asset managers? Thanks!

For context, could you please point out where it says “Insurance companies (when functioning asset managers)” so we could take a look? Thanks!

Hi Howard,

This can be found at the bottom of the “learn more” section of the financial institutions home page in a drop-down.


Thanks, it should mean all insurance companies with regards to its investment activities (i.e., asset side) rather than its insurance underwriting activities (i.e., liability side), which currently does not have a target-setting method (but is something the SBTi plans to work on). For investment portfolios, Table 5.2 of the Near-Term Financial Sector SBT Guidance outlines the minimum coverage requirements for different asset classes.

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To be clear, an insurance company would need to derive 5% or more of its total annual revenue from its investment portfolio in order to be classified as an FI. Is this accurate?

Please also refer to this thread for a related question.

Thank you, Howard. This is very helpful.