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Cat bonds from an investor perspective

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Entrepreneur Lars Irstad invests in cat bond manager

The well-known entrepreneur Lars Irstad, most famous for having founded Programator, purchases 9.9% of the asset manager Entropics Asset Management. Entropics is the first asset manager in Scandinavia specialized in cat bonds (bonds that provide catastrophe insurance).

How do cat bonds work?

Entropics Asset Management – Cat bond investments

Cat Bonds are securities that transfer insurance risks from an insurer to the financial markets. This provides for insurance coverage for people and enterprises facing catastrophe risk. To investors, Cat Bonds offer an asset class with low correlation and historically good risk adjusted returns.

Fund Rate Since start One week One year Report
SEF Entropics Cat Bond (Class A) 98.56 -1.44% -0.17% -4.38% Latest report
SEF Entropics Cat Bond Fund Class I (institutional investors) 96.25 -3.75% -0.17% -4.06% Latest report

Read more about our funds.

Risk Information:
Fund investments entail risk. The value of investments in funds can increase as well as decrease and investors can loose all or some of the investment. Historical return is not a guarantee of future returns.

In April, new outbreaks of the much-feared hemorrhagic fever Ebola shook the world again. The last major outbreak in West Africa 2014-2016 caused more than 11,000 deaths, and dealt a devastating blow to the long-term economies of several countries in the region. The effects were largely due to slow and insufficient response by the world community. However, this time, it appears that the lessons learned have provided for a much faster response, based on insurance principles and backed by cat bonds, rather than reliance on foreign aid. Read more

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

Both cat bonds and corporate bonds are fixed income instruments so it is relevant to compare the risk premium of cat bonds with similarly rated traditional corporate bonds. Currently, cat bonds pay a higher risk premium compared to similarly rated corporate bonds. Read more

Oskar Schyberg
Oskar Schyberg
Orkanen Irma vid tiden för landfall 10 september

The flooding from Hurricane Harvey was barely over when the world was alerted about Hurricane Irma. How could it be that the USA, after twelve years’ absence from major hurricanes, felt the impact of two record-breaking hurricanes over the course of one week? Read more

Martin Hedberg
Martin Hedberg
Chief Meteorologist

While investors are attracted to the uncorrelated returns of cat bonds, the purpose of issuers is to obtain insurance coverage against low frequency and high severity catastrophes. Consequently, we will eventually face an event large enough to cause extensive losses in the re/insurance industry and the cat bond market. However, an event, such as a hurricane category 4 or 5 making landfall in Southern Florida, also tends to increase future returns for investors, as the insurance industry need to attract new risk capital. Read more

Robert Lindblom
Robert Lindblom

“In order to cope with the climate change threat, we must not only decrease emissions of greenhouse gases. We must also be able to manage severe consequences of climate change. Hence, we should, to a considerably greater extent, leverage the resources provided by capital markets,” argues Entropics’ chief meteorologist Martin Hedberg and former minister for financial markets Peter Norman in a debate article. Read more

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment
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