Since October 2020, when we shared the news of our first investment in Kettle, much has changed across politics, the economy and life in general. There is a new President in the White House. Inflation has ticked up. England even became a good football team. However, as we reflect on our most recent investment in Kettle, it’s painfully obvious how some incredibly important things — like the threat of climate change and its impact on our world — remain unchanged. Or in some cases, seem to be getting worse.
As readers of my last post will remember, Kettle is a reinsurance-focused company focused on wildfire risk. Wildfires, like any catastrophe risk, are driven by a blend of underlying variables that exponentially compound in a catastrophe scenario. The company takes cutting edge machine learning models and uses them to simplify and synthesise enormous unstructured data sets. Kettle is built on one simple premise: the complexity and pace of risk expansion is currently outpacing human cognitive capacity.
According to the California Department of Forestry and Fire Protection, five of the six largest California wildfires happened last year. Now, the number of wildfires in 2021 has outpaced averages and and the last twelve months have been the state’s driest since records began. Two years of California wildfires have also burned up to a fifth of all giant sequoia trees.
Outside of California, the Bootleg Fire in Oregon had already claimed over 150,000 acres by mid-July, threatening to displace thousands of people as well as putting the state’s power supply in jeopardy. At one point, there were more than 1,000 firefighters tackling that blaze, with one incident commander describing the fire’s behaviour as “among the most extreme you can find.”
Using their novel swarm neural network system, Kettle is working to pinpoint and quantify the underlying variables which drive climate-driven catastrophic events. Leveraging over a million simulations, Kettle’s models calculate wildfire risk at a half-square mile resolution; under these simulations, Kettle generates up to 20 million simulated wildfires. The aggregation across these simulations allows the team to accurately capture the distribution of wildfire risk and property damage.
Since we made our first investment, Nat, Andrew, Son and Nigel have been joined by a world-class range of data scientists and software engineers, as well as forward-thinking insurance executives such as Kevin Copeland (ex-James River Group) as Chief Financial Officer, Will Haddrell (ex-Sompo) as Chief Underwriting Officer and Amit Shah as Chief Distribution Officer. On the regulatory front, the team also obtained an Innovative Intermediary Insurance Agent licence — “a new classification to encourage and foster innovative approaches to insurance and reinsurance intermediation” — from the Bermuda Monetary Authority.
Finally, as the team announces their $25m Series A fundraising round led by the fantastic team at Acrew Capital, they have also shared another important point of validation as they continue in their journey: they’re now officially writing business! We’re very happy to be backing the team again, alongside Homebrew, True Ventures, Valor, DCVC and LowerCarbon Capital.
This team is taking on one of the most challenging perils in catastrophe risk. Without question, their task is no easy one — and it is still early in the journey — but Kettle’s contribution to resilience is undoubtedly becoming increasingly important. That’s why we invested again.