AIR Worldwide Releases Winter Storm Model for the U.S.

First Model to Employ Numerical Weather Prediction Technology to Help Insurers Better Manage U.S. Winter Storm Risk

BOSTON, Jan. 4, 2006 — AIR Worldwide Corporation (AIR) today announced the release of its Winter Storm Model for the U.S. The model captures the effects of wind, precipitation and freezing temperatures on insured properties. It is designed to provide insurers with a scientifically based assessment of winter storm risk for more effective risk management.

The model was developed to address the fact that the loss history of most insurers is too brief to estimate reasonably the likelihood of the most extreme losses from winter storms. Reliance on historical losses to project future losses can lead, in some cases, to a significant underestimation of the risk.

"Until now, estimating likely losses from winter storms has been very challenging," said John DeMartini, Towers Perrin principal and senior vice president of its reinsurance business. "With the release of AIR's new model, we will be able to incorporate a scientific assessment of winter storm risk into our actuarial analyses, similar to other perils, to help our clients make better reinsurance purchasing decisions."

AIR's model explicitly accounts for the three drivers of winter storm loss: wind, precipitation and temperature. The AIR model is based on numerical weather prediction (NWP), a technology that naturally captures the connection between these storm characteristics by dynamically modeling the physics of the atmosphere.

The AIR model covers the winter storm risk in its various manifestations across the entire continental U.S., including:

  • nor'easters affecting the East Coast
  • ice storms in the Southeast, South-Central and Midwest states
  • freeze conditions in the South-Central states
  • windstorms along the West Coast
  • lake- and ocean-effect snows along the Great Lakes and Eastern Seaboard

The AIR model accounts for regional design code differences that impact the vulnerability of properties to winter storms, the effects of cold temperatures that can burst pipes and cause damage to nonstructural elements and contents, and drifting snow that can accumulate and cause roof collapse.

"Since 1990, winter storms have cost insurers almost $17 billion," said Dr. Peter Dailey, AIR manager of atmospheric science and architect of the new model. "AIR's winter storm model incorporates a number of new scientific techniques, including an innovative dynamic snow load model, to help insurers better assess and prepare for this significant risk."

AIR's Winter Storm Model for the U.S. is available in Version 7.5 of its CLASIC/2TM, CATRADER®, and CATStation® catastrophe modeling systems, as well as for service-based catastrophe risk analyses.

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. Clients 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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