AIR Worldwide Provides Modeling Support for Mexico Earthquake Catastrophe Bond

Transaction marks the first use of capital markets by a Latin American government to cover potential catastrophe costs

BOSTON, May 23, 2006 — AIR Worldwide Corporation (AIR) performed the risk modeling and analysis in support of an innovative catastrophe bond issued by the Mexican government’s finance ministry. This is the first catastrophe bond risk analysis performed by AIR for a sovereign government and marks the first time a Latin American government has turned to the capital markets to cover potential catastrophe costs.

AIR’s risk analysis supported a three-year, $450 million transfer of risk that included the $160 million cat bond. The bond provides catastrophe cover to the Mexican government for financing emergency costs if an earthquake of moment magnitude 7.5 or 8 hits regions near Mexico City or along the Pacific Coast.

“The bond issued by the Mexican government is a landmark transaction that can be used as a model for catastrophe loss protection for developing countries in Latin America and around the world,” said S. Ming Lee, executive vice president at AIR. “The Mexican Ministry of Finance deserves recognition for driving this strategic approach to emergency management preparedness, which will provide Mexico with the financial resources to respond immediately after a devastating earthquake.”

The Mexican government decided to embark on the catastrophe bond after an extensive earthquake risk analysis conducted by AIR. AIR quantified the value of the entire inventory of structures in the country, including residential, commercial, public buildings, hospitals and schools. Using its earthquake model for Mexico, AIR estimated both potential costs resulting from future earthquake scenarios and costs the government could incur from emergency response.

“The modeling analysis for Mexico was different from the typical analysis we conduct for the insurance industry,” continued Lee. “Since the bond is designed to help the government respond with emergency services and rebuilding in the immediate aftermath of a devastating earthquake, it is parametric, which means that it triggers immediately following an earthquake that meets the defined parameters. There is no threshold for losses, which is a more common structure for cat bonds issued by insurers and reinsurers.”

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.

About ISO
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.

Release: Immediate

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

Michael Gannon (AIR Worldwide)
617-267-6645

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