Asset Management After COVID-19: Taking credit risk assessment, portfolio construction and automation to the next level.

In mid-May, Pedro of Vesuvio Labs interviewed Igor Tesinsky, Managing director of Intellibonds, a platform focused on delivering superior alpha and cost savings to “Fixed Income institutional investors” through cutting edge technological products.

Igor has two children and until recently was accustomed to working both from home and in a distributed way, that recently had become the “new normal” for so many of us. On this video call, I’ve started by asking what is effectively Intellibonds for?

As founding director of Intellibonds, Igor firmly believes that an AI-driven investment platform can sharpen the focus of asset managers on the data that matters for each portfolio and provides the tools for fast and highly accurate decision-making. Igor says “despite AI-driven credit risk assessment, portfolio construction and automation, a unique human touch is still needed; skilled professionals remain fundamental to deliver clients’ objectives”. Pedro goes on to ask “but out of the many data sources available, which data sets are critical and should be deeply evaluated? The answer to this question is often driven by asset manager type and investment objectives.

Igor Tesinsky, FCCA — at London Business School, Enterprise 100 event.

There are different needs across the industry. Shrewd asset managers look at Intellibonds platform to predict credit risk and configure the portfolio they have in hands based on the information that matters. That way impartial and proactive data-driven decisions are made, protecting clients’ capital.

Why to spend valuable analyst/portfolio manager’s time searching for so many data points to generate risk warnings and optimize your portfolio if you can have “bots” doing those task for you and delivering reliable results? “You only need to take a final decision”, adds.

Igor drew Pedro’s attention to the example of a large insurance company who has their investment team researching global market trends, credit fundamentals, tracking all sorts of data points and “hoovering up” pricing and news insights from multiple providers. This team consists of highly skilled and highly paid analysts, portfolio manager and traders but they are still individuals prone to information overload and emotional biases.

IntelliBonds’ platform AI-algorithms are dispassionate and ruthlessly thorough when comes to monitoring and predicting credit risk. Their goal is to align investment intelligence with fund objectives and selected investment strategy. No behavioural biases and no information overload with more than 1000s of companies continuously assessed.

For Insurance companies, investment decisions are about value preservation, protecting the assets against the downside. “This sector is known to be a risk-averse by inclination”, commented Igor. But “hunt for yield” meant that many insurers are overexposed to BBBs and HY, part of the market at the time when claims are getting out of control. A large share of fixed income portfolios may need to be liquidated at suboptimal prices to generate liquidity and what’s left may be highly toxic securities of companies that are facing material downgrades if not defaults. Igor adds “I would not be surprised that some insurance companies would tap their shareholders for fresh capital.” Igor confidently predicts a dramatic market downturn for insurers in the coming months and need for tools that allow to proactively managing credit risk and liquidity.

Igor also believes that existing solutions are insufficient to truly support the needs of the insurance industry, so all data points are shown indiscriminately. At IntelliBonds, tools are being built to address data focus tailored for each and single portfolio. Sounds exciting Pedro thought!

Apart from Intellibonds, what are you doing these days Igor?

“We are raising money for our business”, replies Igor. Covid-19, it’s definitely taking more time than we thought”, explaining further, “for everybody that has a family to take care of, plus a business to grow and investors to find, it’s rather challenging but we’re making progress”.

What does Covid-19 mean for Insurance?

Covid-19 has led to a rapid rise in claims across the insurance industry. At the same time, the risk of defaults and material losses in the fixed income investment portfolios has risen with the bond market liquidity for the weaker names rather poor. A proactive approach to credit risk, portfolio management and liquidity generation has become of utmost importance.

“I have been through several market downturns over the past 15 years, so I am no stranger to dealing with significant change and challenges that these downturns bring,” tells Igor. He adds, “Besides, in times of economic distress, opportunities can be found for brave ones. I see the current crisis as an urgent wake-up call for the asset management industry to expedite the adoption of AI, cloud and radical automation.” Insurers may not tolerate reactive management of underperforming assets over proactive disposals by some of their asset managers.

His family and a healthy work-life balance have always been a priority for Igor, but in common with most of us, the fulcrum has changed. So Igor’s WFH routines now include roughly 3 hours in the early morning, plus three more hours in the afternoon and 4 hours in the evening while juggling childcare commitments, effectively bringing homeschooling duties to the workplace.

Igor concludes the interview by saying, “at IntelliBonds we believe passionately that our innovative products will allow institutional investors to outpace the competition and deal with the very difficult economic environment ahead of us. Our passion is indeed contagious and we look forward to sharing it with our future partners and clients.”

https://intellibonds.com

Igor Tesinsky is a Certified Chartered Accountant by training, with a Masters in Finance from the London Business School and is a highly experienced senior credit risk professional. Previously Igor partnered with Conning for over 10 years as a Senior Credit Analyst.

Intellibonds is An AI/Human collaborative platform designed to use AI and process automation to help asset managers quickly and easily identify appropriate investments opportunities and proactively manage credit risk in their Insurance credit portfolios. Through a set of continuously evolving credit risk models that first select the key financial ratios that best describe a company’s credit profile, Intellibonds then uses a different set of algorithms to forecast ratios into the future across 1000s company, finally forested input lead to a predicted credit score. For more info please contact Igor(at)intellibonds.com .

Vesuvio Labs is a Venture builder based in London for the Insurance and Finance sector, helping entrepreneurs by accelerating the process of turning their ideas into scalable products through our flexible, low-code software architecture.

In addition, we can connect entrepreneurs with investors, tax & legal advisors and to the wider tech ecosystem.

www.vesuvio.io |Follow @labsvesuvio on Twitter |Find Vesuvio Labs on Linkedin | Listen to the Digital Rocket Fuel podcast on Spotify | Sign up for our newsletter | #vesuviolabs

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