AIR Worldwide Analysis Concludes That Significant Uncertainty Overshadows Projections of Near-term Hurricane Activity

White Paper Cautions Against Over-reliance on Near-term View of Hurricane Risk

BOSTON, May 9, 2006 — AIR Worldwide Corporation (AIR) issued a white paper today titled “Understanding Climatological Influences on Hurricane Activity: The AIR Near-term Catalog.” The white paper reviews the current state of research on climatological impacts on hurricane activity and explains the approach used to create AIR’s near-term sensitivity catalog, which quantifies the influence of sea surface temperature (SST) forecasts on insured losses for the next five years.

“Our analyses confirmed the correlation between elevated sea-surface temperatures and overall hurricane activity in the Atlantic basin,” said Karen Clark, president and CEO of AIR Worldwide Corporation. “However, there is considerable uncertainty in the expected magnitude and time horizon of potentially elevated risk along the coastline and, most importantly, the impact on regional insured losses.”

The result of more than eight months of research by AIR’s scientists, in collaboration with Accurate Environmental Forecasting (AEF), is reflected in a near-term catalog of potential hurricane activity that will be released by AIR later this month. The research undertaken by AIR and AEF has been peer reviewed by Dr. Kerry Emanuel of MIT and Dr. Jim Elsner of Florida State University.

“AIR's approach to estimating near-term (~5 year) hurricane rates, developed in conjunction with proprietary AEF and Climatek technology, includes the latest physical understanding of the causes of fluctuations in hurricane activity and incorporates a sound statistical model,” according to Dr. Elsner. Dr. Emanuel added that “the AIR technique is based on sound statistical analysis relating SST anomalies to regional risk from hurricanes.”

For the 2006 hurricane season, AIR will offer three stochastic catalogs for its U.S. hurricane model: the standard catalog, which is based on over 100 years of historical data and over 20 years of research and development; a near-term sensitivity catalog, which reflects recent research on the influence of SSTs on near-term (~5 year) hurricane activity; and a 2006 seasonal hurricane catalog that accounts for the influence of current climate signals on hurricane activity for the upcoming season.

“AIR believes that our standard U.S. hurricane model based on over 100 years of historical data and over 20 years of research and development is still the most credible model given the uncertainty arising from the sparse data available for projecting the next five years,” continued Ms. Clark. “Until scientists better understand the relationship between elevated sea-surface temperatures and landfalling hurricane activity, AIR encourages insurers to use the near-term catalog developed by AIR and AEF for sensitivity analyses and not as a replacement for AIR’s standard U.S. hurricane model.”

Understanding Climatological Influences on Hurricane Activity: The AIR Near-term Catalog is available at www.air-worldwide.com.

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

Contacts:
Giuseppe Barone / Erica Helton
MWW Group (for ISO)
201-507-9500
gbarone@mww.com / ehelton@mww.com

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