EQECAT, Press Room

EQECAT to Provide Insurers with Model to Quantify Risks in Gulf of Mexico Offshore Energy Market

Model Covers Risks For Platforms, Pipelines, Other Offshore Energy Industry Infrastructure; Provides For Business Interruption, Contingent Business Interruption

Miami Catastrophe Management Conference In March 2007
To Include Details Of Offshore Energy Model

Oakland, California

March 8, 2007

EQECAT, Inc.'s president, Rick Clinton, said today that as a result of a series of critical industry issues, the firm, a global leader in extreme-risk modeling, has created a state-of-the-art Offshore Energy Model to help the insurance industry manage this risk. This model will be discussed during EQECAT’s March Catastrophe Management Conference.

"The driving factors behind EQECAT's effort were the 2004 and 2005 hurricane seasons, and the resulting offshore energy related losses, which had a significant impact on the availability and affordability of insurance for offshore exposures, coupled with the expected increased hurricane activity over the next decade due to climate change," he said.

"EQECAT's model will help insurers quantify their offshore risks, which can lead to improved pricing and better use of capital," he emphasized.Quantifying risks for the offshore energy market is markedly different and more complicated than modeling for onshore property risks. Most damage onshore is attributed to wind, but losses to the offshore energy market are primarily due to severe waves and currents generated by a storm, as well as undersea landslides. Moreover, while some of the risks to offshore energy include property-exposures to platforms, wellheads and pipelines, an important component of the risk in the offshore energy market is centered on continuous-production issues. The offshore energy insurance market also has some special policy conditions that have to be taken into consideration when modeling this risk.

"We believe our model, which takes these issues into consideration, sets a new industry standard for offshore quantification," Mr. Clinton said.

In developing the Offshore Energy Model, EQECAT combined its extreme-risk modeling expertise with the marine experience and the risk management expertise of ABSG Consulting Inc. ("ABS Consulting"). ABS Consulting does extensive work with energy companies and the United States Government.

EQECAT is a wholly owned subsidiary of ABS Consulting, and "is the only modeler with the ability to combine the in-house catastrophe-modeling expertise with the affiliated company’s extensive marine-engineering experience to develop the most advanced offshore energy model available in the market," Mr. Clinton said.

Model Details To Be Discussed At Miami Conference

EQECAT will detail the key components and advantages of its Offshore Energy Model at its Catastrophe Management Conference in Miami, March 26-28. The new model is expected to be released in the second quarter of 2007 and will be added to EQECAT’s WORLDCATenterprise ™ platform.

EQECAT’s Offshore Energy Model covers a range of risk in the Gulf of Mexico region for oil and gas platforms, pipelines, and other offshore energy industry infrastructure. It also takes into account the removal of debris caused by a specific event, business interruption and contingent business interruption.

Natural catastrophe models generally consist of three components: the hazard, the vulnerability function, and damage and loss calculations.

The hazard analysis part of the EQECAT Offshore Energy Model consists of the same set of stochastic events as the EQECAT U.S. Hurricane Model, enabling users to correlate offshore and onshore infrastructure, such as refineries, risks within a single policy.

Storms In 2004-2005 Consumed More Than Five Years Of Combined Premiums

"The storms of 2004 and 2005 caused significant losses in the Gulf of Mexico, consuming more than five years of the combined premium for the region," Mr. Clinton said.

"Our discussions with insurers and reinsurers about those losses highlighted the urgent need for the introduction of a more sophisticated loss estimation model for this region than those available at that time in the marketplace. The knowledge and experience of ABS Consulting in the offshore industry worldwide and other services provided to port and terminal assets, enabled EQECAT to efficiently produce this highly advanced model."

"According to the most current claims data available, insured losses for offshore platforms totaled $10 billion for the 2004-2005 hurricane seasons," Mr. Clinton said.

"While the market wasn’t fully prepared for the types of offshore energy losses experienced, the insurers have been working diligently to further diversify their risk strategies. EQECAT is dedicated to assisting the marketplace in obtaining the best available tools to accomplish that effort and centers its models on generally accepted science, engineering expertise, claims data, and advanced mathematics. As a result, the models are consistent with the historical experience," he said.

Various Perils To Be Addressed At Catastrophe Management Conference

The Miami conference is one of three catastrophe management meetings scheduled by EQECAT in 2007. The first session will be in Bermuda, March 14-15, and the final meeting in Lisbon, Portugal, June 4-6.

This year’s series of EQECAT conferences are geared toward further expanding participants’ knowledge of EQECAT’s findings about catastrophic perils and helping attendees better understand and manage their portfolios.

In addition to discussing the Offshore Energy Model at a series of breakout sessions, EQECAT will review its USWind™ model, including how the model was built, and the updates incorporated for 2007.

EQECAT executives will also participate in panel discussions with well-known industry authorities to explore the correlation of evolving hurricane activity and the impact on the insurance industry. Guest panelists at the Miami conference include Dr. Greg Holland, director, Mesoscale and Microscale Meteorology Division, Earth & Sun Systems Laboratory, National Center for Atmospheric Research; and Dr. Chris Landsea, research meteorologist, Hurricane Research Division of the Atlantic Oceanographic and Meteorological Laboratory, National Oceanic and Atmospheric Administration. They will provide their insights as to the influence of climate change on tropical cyclones and hurricanes, as well as explore climate change issues.

Other presentations and discussions scheduled for the Miami meeting will focus on:

alternative risk finance vehicles for the insurance industry;
advances in global earthquake modeling; and,
competitive and regulatory issues influencing the integration of catastrophe modeling software more deeply into insurance company management.

For registration, please e-mail Sue Powless at spowless@abs-group.com.

ABSG Consulting Is A Leading Global Provider of Risk Management Services

ABSG Consulting Inc. is a leading independent global provider of risk management services combining industry specialists, risk modeling and practical engineering and technology solutions to help business, finance, industry and government manage risk. Through a comprehensive and integrated risk management approach, ABS Consulting is committed to helping clients reduce business interruption and manage catastrophic, operational, and security risks. ABS Consulting is headquartered in Houston, Texas. For additional information, please log on to www.absconsulting.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 ABSG Consulting Inc. ("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 and www.EQECAT.com.

For more information, contact:

Thomas Larsen
EQECAT, Inc.
1-510-817-3100 | tlarsen@absconsulting.com

Eric R. Samansky
The Samansky Group
1-516-319-0858 | eric@samanskygroup.com