Stable expands parametric scope beyond commodity risk, launches Bermuda insurer

Stable, a technology company that has built an impressive business on the back of its index-based platform for commodity hedging, is to expand its scope further into parametric insurance and has launched a Bermuda domiciled Class 3A insurer to help it share in the underwriting economics.

Stable has been going from strength to strength, having developed a robust data science tech platform and tools, that enabled it to create a methodology for hedging commodity prices risks, focused on the hard to hedge or commodities that previously hadn’t been protected as well.

Stable has also used financial market structures to help it achieve its goals, having previously established a collateralized insurer class of company in Bermuda to support its insurance work and reinsurance needs, while also working with a diverse array of risk capital providers.

Now, Stable has set up a Class 3A insurance company, capitalised to have more than 200% capital adequacy and with Solvency II equivalence.

This commercial insurance platform will help Stable retain more of the economics of its underwriting, so even more closely aligning it with the risk capital providers it works with, while also giving it the ability to write insurance business, and hence it now aims to expand its parametric remit beyond the commodity sectors it has focused on to-date.

The company now intends to expand its price risk management platform to cover the Energy, Fertilizer and Packaging sectors, continuing on a mission to become the world’s largest parametric insurance platform.

Right now, Stable operates across more than 300 hedging markets, offering simple parametric contracts backed by A rated reinsurers with its customer base typically consisting of manufacturers and producers that want a programmatic insurance-like solution to smooth their income, managing costs in their supply chain.

Stable says it is seeing record demand for its product offering right now, with the world having gone through a particularly challenging period of upheaval after the pandemic and with the Ukraine invasion, so now sees an opportunity to respond and help its client base in additional ways.

Richard Counsell, CEO of Stable explained, “My goal is to build Stable into the largest parametric insurer in the world with a broad range of products across all commercial sectors. With our agricultural client base growing rapidly and profitably, we’re delighted to be able to launch protection programs for a wide range of industries beyond agriculture.

“With three years of successful underwriting experience and modelling under our belt and an immensely supportive panel of Risk Capital, now is the time to broaden our business into the Energy, Fertilizer and Packaging sectors, which are also contiguous areas of uncertainty for our existing client base.

“In addition, as the Company becomes more confident in the profitability of our model, I have wanted to align our success with that of our Capital partners and we have now capitalised a commercial insurer in Bermuda; we applied for and, yesterday, received approval from the Bermuda Monetary Authority to be regulated as a Class 3a insurer.

“This will not only allow Stable to share in the economics of our underwriting but more properly reflects our heritage as a risk metric business driven by deep understanding of our markets and the underlying data.”