EQECAT Issues Release 3.10, The Next Generation Atlantic Basin Hurricane Model

September 18, 2007

Oakland, California

EQECAT, Inc., a subsidiary of ABSG Consulting Inc., and the leading authority on extreme-risk modeling, announced today the availability of Release 3.10 of EQECAT catastrophe management software, which includes its next generation model for Atlantic basin hurricanes.

"The storms of 2005 identified the critical need for insurers and reinsurers to adequately assess their exposure to losses from the combined effect of wind and flood," said Bob Healy, Senior Vice President of EQECAT. "EQECAT is the first modeler to offer optional detailed modeling of storm surge risk along the United States mainland, including the incremental potential flood damage due to rainfall from hurricanes. This enables EQECAT users to have a more complete view of hurricane risk and the key factors driving loss," said Mr. Healy.

"We believe that EQECAT offers the most current and complete hurricane insurance model available for the Atlantic basin. Release 3.10 includes numerous improvements based on our research findings from storms during the last several seasons," said Mr. Healy. "We have applied the latest science available, thus providing a model with the best possible representation of Atlantic basin hurricane risk," Mr. Healy said.

"Now that most of the insurance claims from 2005 have been settled, we are able to incorporate the true impact of these events into our model. In so doing, we have included our latest findings from insurance claims, offshore operator damage reports, and our engineering investigations. Based upon the available claims data and other research, EQECAT has determined that Gulf Coast building damage from hurricanes Rita and Katrina was more than previously anticipated due mainly to greater structure vulnerability, delay in repairing damaged structures and increased damage resulting from falling trees and flying debris from this heavy vegetation. Our vulnerability functions in the Gulf Coast region have been updated to include these new findings," Mr. Healy said.

"Prudent assessment of the potential impact of climate change on risk is a critical industry issue," Mr. Healy said. "The EQECAT model now provides a 'push button' option to view near-term risk throughout the Atlantic basin," Mr. Healy said. "That option provides maximum flexibility in analyzing this risk."

The EQECAT near-term risk view is based upon differentiating the frequency of storms occurring during historically observed warm and cool sea temperature cycles, known as the Atlantic Multi-decadal Oscillation (AMO).

"We have chosen to link the EQECAT near-term risk view to the AMO cycle because there is a reliable set of historical events available that differentiates risk during warm and cool cycles. EQECAT believes this approach to be more robust than manipulation of frequency assumptions based on conjecture about the impact of potential future climate changes. There seems to be a growing consensus among departments of insurance and others favoring this approach rather than using an opinion based model," Mr. Healy said.

The demand surge component of the EQECAT model has been updated based on the findings from a review of economic data and insurance claims from 2004 and 2005.

"While there may be an increase in claims for extreme events, such as Katrina, there is a much lower impact on Average Annual Loss (AAL). This is exactly what one would expect, since demand surge is driven by extreme events and AAL is driven by the more frequent, smaller events. As a result, analysts should not expect a large increase in AAL due to changes in demand surge, except perhaps in a few highly exposed areas such as New Orleans," Mr. Healy said.

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

Back to Press Releases