Risk for Insured Losses from Hurricanes in US During Next Decade Will Be Higher Than Long-Term Average

Oakland, California

January 29, 2007

"EQECAT, Inc.'s ongoing analysis of internal data and authoritative external scientific research continues to indicate strongly that the risk for insured losses from hurricanes in the United States during the next decade -- the 'near-term' -- will be higher than the long-term average derived from more than 100 years of data," Rick Clinton, president, said today.

EQECAT, an affiliate of ABSG Consulting Inc, is the leading authority on extreme-risk modeling.

"We believe this assessment should be considered by insurance companies, policyholders, rating agencies, investors, and regulators as we move through future hurricane seasons," he said.

"Given broad industry discussion of climate changes, we have emphasized to clients and the general marketplace that in our view, combining long-term historical climatology data with our scientifically based knowledge and continual review of persistent weather conditions in the Atlantic Ocean, Gulf of Mexico and Caribbean Sea, provides an effective quantification of prospective risk" Mr. Clinton said.

Catastrophe Models Used For Many Purposes

Catastrophe models, such as EQECAT's USWind™, part of its WORLDCATenterprise™ platform, are used by clients and the general marketplace for many purposes.

Rating agencies use the models as one of the tools in determining the creditworthiness and solvency of insurance companies, thus assisting in decisions of investors and potential investors, as well as in the process of structuring catastrophe bonds and other insurance-linked securities. Insurance regulators use models to help determine the ability of insurance companies to pay their obligations to policyholders; and insurance companies use models as one of several tools to quantify the severity and frequency of hurricanes in specific areas, measure existing portfolio risk, assist in future underwriting decisions, and consider pricing options.

EQECAT Models Centered On Science, Engineering, Claims Data, Mathematics

"In developing our catastrophe models, covering numerous hazards across the world, EQECAT relies on generally accepted science, engineering expertise, claims data, and advanced mathematics," Mr. Clinton said. "The resulting models are consistent with the historical experience."

"In developing the models, the EQECAT team is dedicated to providing an unbiased view of the risk, a policy which is particularly important as our clientele cover the entire risk spectrum, and include risk managers, insurers, reinsurers, and financial market participants from investors to analysts."

EQECAT's hurricane model is based on more than 100 years of historical data. Insurance companies have successfully used the model for rate filings in many states. In addition, the model has been reviewed and certified in nine consecutive years, through 2006, by the Florida Commission on Hurricane Loss Projection Methodology for use by the marketplace in Florida.

Many scientists have observed a cyclical trend in hurricane activity over the last 100 or more years.

"This trend correlates well with the Atlantic Multidecadal Oscillation (AMO) phenomenon, and strongly indicates that we are in a period of increased hurricane activity that could last for five, ten or even more years," Mr. Clinton said.

EQECAT Near-Term Model Provided For Management Purposes

"We believe that this model provides a better suggestion of future trends in hurricane activity, and is one of the factors that have been considered in the rating and issuance of the catastrophe bonds that we worked on in 2006."

According to the National Oceanic and Atmospheric Administration (NOAA) the AMO phenomenon is "an ongoing series of long-duration changes in the sea surface temperature of the North Atlantic Ocean, with cool and warm phases that may last for 20-40 years at a time and a difference of about 1° F between extremes. These changes are natural and have been occurring for at least the last 1,000 years."

Historical Climatology, Current Weather Cyclicality On Agenda At Conference

The importance of examining historical climatology, along with current weather cyclicality and other related factors in assessing and quantifying risks, will be a focus of EQECAT's 2007 Catastrophe Management Conference, in Miami, Florida, March 26-28.

The Miami client conference will also examine a broad range of other issues with authorities in climate and modeling.

Panel Discussions To Focus On Portfolio Management

The Miami conference is one of three catastrophe management meetings for clients 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.

"At each of this year’s EQECAT conferences, we will further expand client knowledge of our findings about catastrophic perils to help them better understand and manage their portfolios going forward," Mr. Clinton said.

EQECAT executives will also participate in panel discussions with well-known industry authorities to explore the correlations 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 global warming issues.

At a series of breakout sessions, attendees will discuss EQECAT's USwind model, including how the model was built, and the updates incorporated for 2007.

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

• Alternative risk finance vehicles for the insurance industry


• EQECAT’s new industry standard model for offshore energy (Gulf of Mexico) risk modeling


• Advances in global earthquake modeling


• Competitive and regulatory issues influencing the integration of catastrophe modeling software more deeply into insurance company management

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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