Cat bond investment management is somewhat different from the management of other asset classes as it is slow frequency trading and much more portfolio risk management. Entropics’ portfolio collects risk premiums by holding a globally diversified portfolio of natural catastrophe risk, with little or no correlation with traditional assets classes like equity and bonds. I am often asked by people I meet where cat bond management differs from traditional asset management, and I would like to use the opportunity to briefly explain some of the differences. Read more.
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.
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.
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.
Cat bond investors will often refer to the “multiple” of a certain cat bonds. The term “multiple” is rarely used in other financial sectors, but is actually an important metric when evaluating a cat bond investment opportunity. It also reflects the fact that cat bonds are closely related to the traditional insurance industry, where a similar terminology is more common. So, why should you care about it? Read more.
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.
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.
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.
The volatility on the stock exchanges in August 2015 served as a reminder of the equity risk in many portfolios. Meanwhile, there are few alternatives for uncorrelated returns, as interest rates are low and many hedge funds face difficulties generating alpha. As an investor, you should always be conscious of how unexpected risks can affect your portfolio. Read more.
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.
A prognosis shows 70% probability for lower hurricane activity than normal, mostly due to El Niño, writes Entropics meteorologist Martin Hedberg. However, the main source of risk is the number of hurricanes that make landfall. Read more.
What makes Entropics stand out in the crowd? We are the first Nordic asset manager specialized in cat bonds, we emphasize responsible investments and are an independent manager. Read more.
El Niño - Southern Oscillation (ENSO) is a global weather system greatly affecting local weather globally, which also affects the prevalence of cyclones in the Atlantic and the Pacific. With reasonably large probability we are approaching a sustained El Niño situation. Read more.
MetroCat is an insurance solution using cat bonds to provide insurance protection for the New York Metro against damages from storm surges. Read more.
Cat Bond Lite is an exciting development in the Cat Bond sphere. By enabling smaller entities to transfer insurance risks to the capital markets, new sponsors can utilize the mechanism and to investors it promises further investment and diversification possibilities. Read more.
While it’s very encouraging to receive so many inquiries on when the Fund will open for investments, it’s also hard to have to ask those interested in investing to bear with us for a little while longer. The reason for not just opening the fund and inviting investors is our determination to ensure a successful start for the fund. And doing so requires some caution on the fund manager’s behalf. Read more.