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“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

Purpose matters

2017-05-02

At Entropics, the most important metric for responsible investment is the ultimate purpose of the insurance contract covered by a cat bond. It is an overlooked metric when studying responsible insurance operations. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

How can we provide for improved insurance protection in developing economies? Parametric cat bonds and index based insurance offer possibilities. Sometimes critics argue that this entails a lack of correlation between damages and payments. But is this necessarily a disadvantage? Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

Climate change is set to increase the frequency of extreme weather events. Yet, we may paradoxically see fewer hurricanes with large impacts, due to the effects of urbanization. For insurance this poses a great challenge, where cat bonds may be part of the solution. Follow our animation explaining the hurricane paradox. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

Britain's leaving the EU will have a large impact on financial markets. Even ILS and cat bonds will be affected. The asset class has, however, demonstrated its fundamentally uncorrelated nature during the turmoil on the equity markets after the referendum to the benefit of its investors when traditional portfolios have been negatively affected. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

The Swedish newsletter Hållbart Kapital (Sustainable Capital) has published a piece on Entropics and cat bonds from a sustainability perspective. In the interview, I discuss the benefits to society from cat bonds, how we approach ESG issues and why the African Union fancies cat bonds. Read below for a full translation of the article. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

This day, March 11, marks the fifth anniversary of the Tōhoku earthquake, the worst post world war II disaster to strike Japan. The Tōhoku earthquake was one of the most severe earthquakes on record, with a magnitude of 9.0. The effects were breath-taking: Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

The ”Big One”, is a potential earthquake along the San Andreas Fault in California with a magnitude greater than 7.0 on the moment magnitude scale, could cost more than $200 billion and is an illustrative example of the case for cat bonds. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

Losing money from an investment will always be a sour experience. However the cause of the loss certainly affects how it is perceived. The MultiCat Mexico Class C cat bond is a good example, as funds are now released for reconstruction in Mexico in the aftermath of hurricane Patricia. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

The most common misunderstanding about cat bonds that I encounter is that "it's cynical to invest in disaster". Quite often, this is a good starting point to explain the benefits of cat bonds: By transferring risk to the capital market, insurance companies can assume risks that would otherwise be difficult or impossible to accept. However, this misunderstanding sometimes makes it way into media, such as in an article at the web site of Sweden's leading business newspaper, where cat bond investments are portrayed as cynical. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

Starting with the monthly report for November 2015, Entropics will now publish monthly key performance indicators for responsible investments. While still a work in progress, the indicators give an impression at a glance of the RI performance of the fund and, not least, of the benefits to society of cat bonds. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

An interesting initiative was recently taken in Riksdagen, the Swedish Parliament. In a motion to the Parliament, Per Åsling (Centre Party), raises the possibility of making Sweden an attractive domicile for structuring cat bonds and other insurance linked securities (ILS). In the motion, he raises this as an opportunity for Swedish enterprises to find alternative insurance capital for issues such as forest fires, harvest damages, dam failures or damages to infrastructure from flooding. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

Though nearly all Swedish municipalities recognize climate challenges, less than half have decided to work with the issues and only one in five have identified measures. Not least are discussions on financial aspects in their infancy. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

MetroCat is an insurance solution using cat bonds to provide insurance protection for the New York Metro against damages from storm surges. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

Though not really "the first cat bond ever", a Swedish government agency tried insurance linked instruments ten years before the introduction of cat bonds in the USA. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

2014 showed strong performance from cat bonds. The market volume exceeded, for the first time, 25 billion USD after a strong finish in December, with new emissions of more than 1.5 billion USD. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

Unclear financial responsibility for catastrophic events may be an explanation for inadequate catastrophe preparedness in Swedish municipalities. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

Lack of standardization is an obstacle to increased use of cat bonds. Ongoing efforts aim att simplyfing issuance and use of cat bonds, not least in developing economies, spearheaded by the World Bank. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

An important, and often overlooked, aspect of cat bonds are the benefits they bring, facilitating increased access to insurance protection against natural catastrophes. Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment

Cat bonds - betting against natural catastrophes is a brochure by Entropics introducing cat bonds and the market (in Swedish only) Read more.

Henrik Sjöholm
Henrik Sjöholm
Director of Communications and Responsible Investment