AIR White Paper Demonstrates How Insurers and Reinsurers Can Prepare for Multiple Catastrophes in a Single Year

BOSTON, Jan. 13, 2005 — The 2004 hurricane season demonstrated the financially destructive potential of several moderate hurricanes occurring within a single year. To help insurers and reinsurers analyze and prepare for future multiple-catastrophe years, AIR Worldwide Corporation has released a white paper entitled "Analyzing and Preparing for Multiple Event Seasons." The white paper includes a detailed explanation of how insurers can explicitly account for the probability of multiple events in a single year. A case study demonstrates techniques insurers can use to manage the risk of multiple-event and multiple-peril years.

"The 2004 hurricane season was a trying time for many insurers, including Florida Farm Bureau," said Rade T. Musulin, ACAS, MAAA, vice president – Operations, Public Affairs & Reinsurance at Florida Farm Bureau, which writes exclusively in the state of Florida. "However, using AIR's catastrophe models, we were able to design a reinsurance program that accounted for both frequency and severity of catastrophic events, allowing us to absorb these losses without significant financial disruption. AIR's systems, which we've been using for a number of years now, are an integral part of our catastrophe management program."

The AIR white paper provides insurers with practical techniques for analyzing and preparing for multiple-event and multiple-peril seasons. A case study illustrates how AIR systems can be used to determine the probability that zero, one, or multiple events will occur in a single season, as well as the probability that some or all of those events exceed the company's retention. The white paper concludes with several examples showing how companies can ensure that they have adequate reinsurance protection both from single large losses and from multiple losses in a single year.

"All of AIR's catastrophe models provide the probabilities of multiple-event seasons. They also enable users to estimate the losses to their portfolios from the individual events that make up a multiple-event season," said Karen Clark, president and CEO of AIR Worldwide. "The techniques described in this white paper provide a resource for insurers actively engaged in improving their catastrophe risk management strategies."

About AIR Worldwide Corporation
AIR Worldwide Corporation (AIR) is a leading risk modeling company helping clients manage the financial impact of catastrophes and weather. Utilizing the latest science and technology, AIR models natural catastrophes in more than 40 countries and the risk from terrorism in the United States. Other areas of expertise include site-specific seismic engineering analysis, catastrophe bonds and property replacement cost valuation. A member of the ISO family of companies, AIR was founded in 1987 to provide its insurance, reinsurance, corporate and government clients a complete line of risk modeling software and consulting services that produce consistent and reliable results. Headquartered in Boston, AIR has additional offices in North America, Europe and Asia. For more information, please visit www.air-worldwide.com.

Release: Immediate

Contact:
Michael Gannon
AIR Worldwide Corporation
(617) 267-6645

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