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EQECAT Announces U.S. Hurricane Model Challenge

Overview | 2004 Hurricane Losses | Press Release

Cites Consistently Low Model Estimates by Some For 2004 Florida Event Losses, and the Impact of Multi-Event Retentions

Oakland, CA

April 25, 2005

EQECAT, Inc. proposes to model the 2004 hurricane events for Florida exposure for comparison against the estimates generated by other models, according to Richard Clinton, president of EQECAT, the leading authority on extreme-risk modeling.

We are so confident in the ability of the EQECAT model to predict 2004 hurricane losses more accurately than other models, that if we fail to do so in the comparison test, the analysis is free. We think that insurers deserve better model performance than they experienced in 2004 and we’ll put our money where our mouth is to prove that EQECAT is a better model,” Mr. Clinton said. He added, “the 2005 hurricane season is almost here, so it is a perfect time for insurers to know their exposure.”

Some Insurers Reportedly "Caught Off Guard"

“The aftermath of the 2004 hurricane season continues to impact the industry,” Mr. Clinton said.

“Some primary insurers were disappointed with their catastrophe model loss estimates for the four hurricanes affecting Florida in 2004”, he said. “Some Insurers sustained larger than expected losses due to failure of their models to accurately predict loss levels for the four storms, particularly for commercial exposures,” he said. “Insurers also have been reported to say that they were caught off guard by the impact of having four retentions. This highlights the need for models to help users to manage annual aggregate exposures, as well as individual event ‘per occurrence’ exposure. Both issues raise the possibility of deficiencies in some of the catastrophe models insurers have become so dependent upon,” Mr. Clinton said.

“We believe that EQECAT provided significantly better loss estimates than other hurricane models, and better capability to understand the potential impact of multiple events. These are advantages that we can demonstrate and that have significant importance to insurers.”

The 2004 Hurricane Challenge offer is for any direct property writer having commercial and/or residential property premiums of $30 million or more in Florida.

For more information about the EQECAT Hurricane Model Challenge please contact EQECAT at (510) 817-3101 or Solutions@EQECAT.com.

EQECAT Serves Global Clients Through Extensive WorldCATenterprise™

Through its user-friendly, extreme-risk modeling software, WorldCATenterprise™, EQECAT enables clients to assess and manage potential damage and loss from wind, earthquakes, flood, wildfire, and terrorism, among other perils. WorldCATenterprise™ includes 167 natural hazard software models for 88 countries spanning six continents.

EQECAT, and its parent ABS Consulting, serve the global property and casualty insurance industry, major multinational corporations and financial institutions. EQECAT is known as the technical leader and innovator in the development of analysis tools and methodologies to quantify insurers and major corporations’ exposure to natural and man-made catastrophic risk.

EQECAT was founded in 1994 and is headquartered in Oakland, California. For additional information, please log on to www.absconsulting.com, or www.EQECAT.com.