Swiss Re Insurance-Linked Fund Management

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ILS manager Entropics approved for cat bond investing by Swedish FSA


The first insurance-linked securities (ILS) fund manager based in Scandinavia has now received its license from the financial regulator. Entropics Asset Management AB from Sweden has now been approved to begin investing by the Swedish FSA.

Entropics Asset Management AB, the first Swedish ILS asset manager who will specialise in catastrophe bond investments, said that it has received its authorisation to operate as it has now received its license from Finansinspektionen, the Swedish Financial Supervisory Authority, to carry out discretionary portfolio management.

Entropics will begin operations with a UCITS catastrophe bond fund, making it one of the ten ILS managers worldwide offering this type of UCITS compliant strategy which many investors are now familiar with. Entropics management aim to deliver attractive risk adjusted returns, with very low correlation to other asset classes, to its investors.

For investors, this means that the SEF Entropics Cat Bond Fund, as it will be called, can be expected to contribute to better diversification and less volatility within a traditional portfolio, said Entropics CEO Robert Lindblom.

The approval from Sweden’s FSA allows Entropics to assume discretionary portfolio management assignments. In the autumn, Entropics will start managing its first ILS fund, the catastrophe bond focused SEF Entropics Cat Bond Fund in cooperation with Swedbank.

Lindblom told Artemis; “I’m glad that the authorization, as expected, was granted before the vacations. This means that our partner Swedbank can submit the application to set up the fund in Luxembourg and that it can be approved in early autumn. As a large number of issuances and renewals is predicted in Q4 2014 and Q1 2015, this is very important to our timing. The fact that yields seem to be recovering is also a promising prospect as we are about to start operations.”

The cooperation with Swedbank will see Entropics focus on the investment, risk selection and portfolio management decisions, while Swedbank focuses on fund administration and infrastructure. By working with Swedbank, Entropics fund will be widely available on the Swedish market, giving the firm access to a robust distribution network, and will also give the possibility to passport it to other EU markets.

Lindblom expects the first Swedish managed cat bond fund will be well-received by investors; “An interesting aspect of our going to the market in the autumn is the discussion on ethical investments in Sweden and abroad. Cat Bonds provide for better insurance coverage in exposed regions of the world and have received increased interest as a financial instrument to take on the effects of climate change, while yielding healthy returns so far. I believe this combination will prove attractive to many investors.”

Entropics was founded in the autumn of 2013. Its founders Robert Lindblom and Dr. Gunnar Roos have assembled a team of eight professionals with more than 100 years collective experience in the reinsurance, risk management and investment sectors.

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