Nephila Capital, the world’s largest ILS and reinsurance fund manager, is to provide weather risk capacity to support The Demex Group, a climate risk focused insurtech start-up, as it comes out of stealth with a mission to provide financial risk solutions to deliver greater climate resilience.
The Demex Group has secured $4.2 million of seed funding from two of the leading financial services, fintech and insurtech focused venture investment groups, Anthemis and IA Capital.
Nephila Capital is set to supply specific weather risk capacity to underpin products that The Demex Group creates, while global reinsurance firm Munich Re is also onboard to provide additional risk capacity and also operational support.
Demex is creating climate resilience risk transfer products backed by data and technology, with clients expected to include municipalities as well as enterprise customers, with an example being Fortune 500 property managers with highly volatile year-to-year snow-removal expenses.
With weather and climate related factors a significant driver of revenue fluctuation, embedding climate resilience in the form of financial products, risk transfer and hedging capacity within large businesses and organisations is seen as a way to help them smooth the impacts of extreme events on their bottom-line.
Demex looks to gain a far more granular understanding of a clients operations and exposures, to enable it to construct extremely sensitised and responsive parametric risk transfer solutions, that can be structured as weather derivatives, insurance and reinsurance, or other capital markets hedging solutions.
Demex Founder and CEO, Ed Byrns commented, “Our customers know that extreme weather drives unwanted fluctuations on their bottom line. We are building a world where financial resiliency to climate is as simple as the tap of a credit card.”
Demex’s mission is to bring expertise from across finance, insurance, capital markets, science and technology, to create cutting-edge technology and customised financial solutions that can help organisations to mitigate their unique weather risks and capitalise on climate-linked business opportunities.
“The technology that Demex has developed, combined with its knowledge of weather and financial risk, can help institutions better understand and manage the risks they hold,” added Matt Coleman, Director of Strategic Partnerships at Nephila Climate.
Ruth Foxe Blader of financial technology investor Anthemis further explained, “Corporates, large and small, need balance sheet protection against non-catastrophic climate risks. Demex is, by far, the most sophisticated solution to this problem existing in the market, in terms of calibrating and transferring climate risk. They will transform how the insurance industry thinks about weather resilience.”
Matt Perlman, Partner at venture investor IA Capital Group commented, “Managing operational climate risk is quickly becoming an imperative for businesses across a growing array of industries. The Demex Group’s ability to analyze a client’s specific exposures in a very granular way and generate a precisely calibrated risk transfer solution goes far beyond traditional weather derivatives and represents the frontier of parametric insurance.”
Munich Re, through its weather risk transfer focused Munich Re Trading LLC unit has already worked with Demex to create select customised weather index-linked hedging instruments.
The goal is to enable businesses to better manage non-catastrophic weather risks, using technology and financial innovation.
“Innovation and technology can help businesses become more resilient and better manage the impacts of extreme weather,” said David Stevenson, CEO and President, MRTL. “We are excited to witness the next chapter as our colleagues grow and expand their business to help customers mitigate the risks associated with unpredictable snowfall.”
The application of advanced technology alongside capital market structuring innovation, as well as efficient reinsurance capacity from the biggest players in traditional and ILS markets, makes Demex an interesting start-up to watch.