Entropics is an investment manager to institutional investors – primarily those based in the Nordic countries. Entropics specialises in the insurance-linked securities (ILS) asset class including the large category of catastrophe bonds (cat bonds). Entropics was founded in 2013 and is a pioneer in sustainable investment management of ILS portfolios. ILS gives investors access to reinsurance risk premiums that are totally uncorrelated with equity market risk, interest rate risk, and credit risk.
A SPECIALISED NORDIC ILS MANAGER AND A PIONEER IN SUSTAINABLE INVESTMENT MANAGEMENT
Entropics’ investment management strategy combines cost efficient market-like returns with sustainable investments and sound underwriting. We believe that keeping costs low is essential for investors, and that effective risk management is fundamental in order to construct a portfolio with a controlled risk concentration.
A Sustainable investment policy since inception
Entropics has had a policy for sustainable investment management of ILS portfolios since its inception. Initially the policy only included the exclusion of securities with problematic insurance purposes such as the cover of energy production using fossil fuels. It has over time been further developed and now includes engagement with issuers.
Returns and markets vary. Costs are predictable.
Cost efficiency provides for better investor returns. Entropics’ ensures cost efficiency while maintaining the underwriting expertise necessary to control risk. Entropics strives to report with full transparency so as to meet investors’ cost expectations.
Nordic culture and regulatory environment
Entropics started in 2013 with a Nordic based team specialised in sustainable investments in insurance-linked securities (ILS).
Focus on core skills
Regulatory regimes, globalization and digitalization all call for a focus on core skills. We focus on sustainable investment management services. We offer investment management services to, for example, mutual funds, institutional managed accounts and co-operation on product development.
Entropics is a Nordic specialised investment manager. Our investment universe spans over the approximately 100 billion USD Insurance-Linked Securities market, of which the category of cat bonds constitutes about one third of the market.
Investment management services independent of the client’s administrative setup.
The client can choose the administrative structure. Entropics focuses on delivering investment management services. Our services are available to clients who wish to offer an ILS fund under their own brand, managers of multi-strategy products and managed accounts.
Investor Reporting can be tailored to each client’s specific needs.
Reporting guidelines and templates are transparent. In addition, reporting can be developed to meet the client’s specific needs. This includes a selection of relevant risk and performance metrics, as well as sustainability reporting.
Entropics can assist in developing client-specific sustainability guidelines based on the client’s existing policies and report according to these.
Investing in a more resilient world
Resilience is the capacity of a system to deal with change and continue to develop. It is about how humans and nature can use shocks and disturbance like a financial crisis or climate change to spur renewal and innovative thinking.
Stockholm Resilience Centre
RESILIENT INSURANCE IS ABOUT USING INSURANCE TO IMPROVE CLIENTS’ AND SOCIETIES’ CAPACITY TO PREVENT AND MITIGATE THE IMPACT OF NATURAL CATASTROPHES OR OTHER SHOCKS. IF DISASTER STRIKES, TO REBUILD/RECONSTRUCT MORE RESILIENT STRUCTURES.
Today about 70% of global economic losses from natural disasters are not insured. The ILS market and individual managers are constantly looking for new markets and diversification opportunities and can play an important role in closing the protection gap between economic and insured losses. By increasing the resilience in society and among policy holders’, insurance can be made more affordable and therefore will be available for more people and property in areas exposed to natural catastrophe risk.
Insurance can be an important driver of individual and collective catastrophe preparedness through premium incentives and by offering advice and expertise to policy holders and communities.
This can include premium incentives for individuals to increase preparedness by, for example, installing storm shutters, improving drainage, or reinforcing roofs. At the communal level, premium discounts can be applied to policy holders if local authorities take mitigating actions, such as improving drainage systems, clearing fire-lanes or by adopting local regulations requiring property owners to take mitigating measures.
Policy wordings can for example be formulated to encourage improvement of resilience when repairing or reconstructing a damaged building. Wordings can also call for buildings to be relocated if they are in a too exposed area.
ENTROPICS AND STOCKHOLM RESILIENCE CENTRE AT STOCKHOLM UNIVERSITY HAVE FORMED A JOINT SUSTAINABILITY COMMITTEE TO PROMOTE RESILIENCE THINKING IN CATASTROPHE INSURANCE.
The purpose of the committee is to promote increased application of resilience thinking in insurance covering natural catastrophe risk and to promote shared learning between the two organisations.
This is to be achieved through understanding and the application of recent research and insights about insurance and resilience, and by disclosing Entropics’ engagement efforts with sponors of cat bonds and other insurance related instruments (ILS).