BOSTON, June 27, 2005 — AIR Worldwide Corporation (AIR) today announced that PICC Property and Casualty Company Limited (PICC) has completed the first earthquake risk analysis using AIR's China earthquake model. Guy Carpenter coordinated the analysis of the PICC portfolio, which represents more than 60 percent of the property and casualty insurance market in China. In addition to residential, commercial and industrial risks, the analysis covered construction and erection all risks (CAR/EAR), an important line of business in the rapidly developing country.
"As our business continues to grow, it is essential that we effectively manage our risk from catastrophes," said Zhang Qing, general manager of the Reinsurance Department at PICC. "Of particular concern is earthquake risk to our many CAR/EAR policies, which currently account for 40 to 50 percent of our total earthquake exposure. AIR's sophisticated engineering-based approach to modeling buildings under construction has given us a better understanding of our risk."
"Modeling earthquake risk to buildings under construction is challenging because the vulnerability and replacement cost of the structure changes over time," said Dr. Bingming Shen-Tu, AIR's technical project manager for China. "AIR has developed an objective, engineering-based approach that captures this time-dependent vulnerability of buildings under construction, from excavation to project completion."
In addition to its unique approach to modeling CAR/EAR, the AIR model incorporates a full complement of damageability relationships to estimate potential earthquake damage to China's widely varied building inventory, which includes masonry, reinforced-concrete and steel-frame buildings. To develop these relationships, AIR used the results of well-documented engineering studies, information about China's building codes, structural analyses and historical damage data. Detailed information about regional building types, age and replacement values helps insurers gain a better understanding of their exposures and enables them to manage their earthquake risk more effectively.
"We are impressed with the detailed nature of the AIR model and with the extensive research it represents both in terms of the regional earthquake hazard and China's diverse building stock," said Lawrence Liao, CEO Hong Kong Operations at Guy Carpenter, who coordinated the study. "We found AIR's study to be a comprehensive analysis of PICC's market-leading property and casualty portfolio in China."
In addition to the building vulnerability component, AIR's China earthquake model includes a detailed hazard component. To ensure that this component of the model is built upon the most current scientific findings, AIR's earthquake team researched local literature and consulted with geophysicists, seismologists and geologists from major research institutions within the China Earthquake Administration. The hazard component draws upon China's extensive historical earthquake experience dating back to 780 B.C., as well as detailed paleoseismic, geologic and GPS information, to depict the locations, magnitudes and occurrence rates of potentially damaging future earthquakes.
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.
ISO is a leading provider of products and services that help measure, manage and reduce risk. ISO provides data, analytics and decision-support solutions to professionals in many fields, including insurance, finance, real estate, health services, government and human resources. Professionals use ISO's databases and services to classify and evaluate a variety of risks and detect potential fraud. In the U.S. and around the world, ISO's services help customers protect people, property and financial assets. For more information about ISO, visit www.verisk.com/iso.
Michael Gannon (AIR)