Insurers Should Plan for Repeat of Benchmark Catastrophe Events, EQECAT President Says

Oakland, CA

February 25, 2004

(Orlando, FL --) The insurance industry must anticipate that catastrophic events, on the magnitude of the 1992 Hurricane Andrew and the 1906 San Francisco Earthquake, will eventually recur with losses far exceeding those originally incurred when factoring in today's values and exposure levels, Rick Clinton, president, EQECAT, Inc. told a group of insurers and other industry executives at the company's "2004 Catastrophe Management Summit," here.

EQECAT estimates that a repeat of a storm, the size of Hurricane Andrew, would cause approximately $28 billion to $43 billion in insured losses, and a repeat of a seismic event on the magnitude of the San Francisco earthquake could cause approximately $31 billion to $59 billion in insured losses, Mr. Clinton said.

The insurance industry typically uses a 100 year to 250 year points on the exceedance curve as measurement of loss exposure. "What this translates into is the loss that would happen once every 100 or 250 years," Mr. Clinton said.

EQECAT estimates the 100 year and 250 year industry loss for earthquake to be $25 billion and $44 billion, respectively, and hurricane loss estimates to be $65 billion and $95 billion, respectively.

EQECAT, the authority in extreme risk modeling, provides leading insurance companies worldwide with innovative, reliable and technically robust tools and solutions, covering natural hazards in 88 countries, the highest number of any organization.

Integrated Catastrophe Management: The Future of Catastrophe Modeling

To position for these kinds of events, the industry should look toward Integrated Catastrophe Management Systems (ICMS), which Mr. Clinton said are "the future of catastrophe modeling."

"Under an ICMS system the catastrophe model or models would be completely integrated into a company's underwriting and catastrophe management software system, providing up-to-the-minute catastrophe management information to all users."

Moving to an integrated program now "is completely within your power," he said.

EQECAT's ICMS capability enables clients to save time and money by seamlessly integrating EQECAT catastrophe modeling software into existing in-house underwriting pricing and accumulation management systems.

Using this approach, insurers can automate the workflow and make current risk information available enterprise-wide.

These results would flow throughout a company to everyone, from the catastrophe manager to the underwriter and executive management team, providing more efficiency and sophistication to each insurer's catastrophe management program.

ICMS enables insurers to effectively use a multiple model strategy, which mitigates the risk associated with using only a single model platform.

Catastrophe Bond Market Expected to Grow in 2004

Mr. Clinton also told the conference,

"software will continue to grow in all segments of the insurance industry, as will EQECAT's consulting revenue, which grew by almost 50 percent in 2003. The key areas of EQECAT's consulting growth will continue to be special studies, securitization and custom software," he said.

Mr. Clinton told the insurers, that he sees "another good year for catbonds." He noted that according to Moody's, catbond issuance was up 50 percent in 2003 and this trend should continue in 2004."

Currently, over 60 percent of the outstanding issues are based on EQECAT's technology.

EQECAT is a leader in providing risk analysis support to insured linked securities. In 2003, it provided support on three transactions totaling more than $1 billion of risk transfer. Since 1997, EQECAT has supported the issuance of more than $3 billion of catastrophe risk involving European windstorms and earthquakes, Atlantic hurricanes, central United States and California earthquakes, and Japan earthquakes and typhoons.

In 2003, EQECAT provided scenario and probabilistic risk analysis for the largest securitization of earthquake risk.

EQECAT, Inc. provides state-of-the-art products and services to the global property and casualty insurance, reinsurance and financial markets. EQECAT is the technical leader and innovator of catastrophe risk management models that quantify exposure to a range of natural and man-made catastrophic risks.

Through its modeling software platform, WORLDCATenterprise™, EQECAT enables clients to quantify and manage the potential financial impact of natural hazards. WORLDCATenterprise includes 181 natural hazard software models for 95 countries spanning six continents. These models are based upon innovative applications of the latest science, engineering expertise, claims and exposure data and advanced mathematics.

EQECAT, a subsidiary of ABSG Consulting Inc., was founded in 1994 and is headquartered in Oakland, California.

For more information, contact:

pr@eqecat.com

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