BOSTON, Nov. 3, 2006 — For the third year in a row, AIR Worldwide Corporation’s agricultural risk group has won the FACTSim Futures and Options Trading Competition using the company’s industry-leading crop yield model. AIR was presented with the award at the annual Southern Region Agricultural Outlook Conference in Atlanta, Georgia. The AIR crop yield model forms the basis of AIR’s probabilistic crop loss model for insurers and reinsurers.
“Over the contest’s three month time period we achieved returns in excess of 50 percent on grain futures and options contracts,” said Dr. Gerhard Zuba, Senior Research Scientist at AIR Worldwide. “The crop yield forecasts provided by the AIR model gave us a definitive advantage in developing our trading strategy for the contest. This same technology can be used by crop insurers and commodity traders to bring an entirely new level of sophistication to their business decision making.”
The leading causes of insured losses in agriculture are drought and excessive precipitation. The AIR crop yield model — which outperformed the USDA’s National Agricultural Statistics Service in forecasting summer yields for corn and soybean in 2005 and 2006 — isolates the effects of weather on yield by coupling high-resolution soil and weather data with crop-specific weather susceptibility information.
“This same underlying technology that accurately quantifies the impact of weather on crop yields also forms the basis of AIR’s probabilistic crop loss model,” said Dr. Oscar Vergara, Agriculture Risk Management Consultant at AIR Worldwide. “The model is used by crop insurers and reinsurers to assess and manage their risk. Insurers also employ the model for fund allocation and reinsurance purchasing decisions.”
About the FACTSim Futures and Options Trading Competition
The annual competition is sponsored by the Southern Extension Marketing Committee (SEMC). Awards are based on profits earned using a Web-based futures and options trading simulator. The trading simulator provides real-life experience in futures and options markets by allowing contestants to make real-time trades for agricultural commodities along with energy and metals.
Five-person teams from each state were invited to participate in the competition, which began on July 1, 2006. Participants had until the middle of September to make the most profit based on the team’s overall trades.
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. An ISO business, 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.
Kevin Long (AIR)