AIR Worldwide Provides Residential Property Portfolio

Insurance-to-Value Assessments for Reinsurance Renewals

BOSTON, October 15, 2007 — AIR Worldwide Corporation (AIR) today announced a new service to assess insurance-to-value (ITV) of U.S. residential property portfolios for reinsurance contract renewals. Available immediately for insurers, reinsurers, and brokers, the service draws upon AIR’s expertise in property valuation and its extensive residential property database to reliably estimate the replacement value of properties within a portfolio. A more accurate assessment of insurance-to-value will enable insurers and reinsurers to make better reinsurance decisions and improve their overall catastrophe risk management.

“The challenges insurers face in maintaining up-to-date replacement values are well known in the industry,” said Chris Harris, Chief Underwriting Officer at Montpelier Re. “In the past, we have compensated for this bias by applying an industry-wide adjustment factor, but the wide range of undervaluation in our cedants’ portfolios uncovered by AIR’s analysis is leading us to rethink this approach. Moving forward, AIR’s ITV analyses will help us better quantify differences in insurance-to-value from cedant to cedant.”

Insurers take different approaches to estimating insurance-to-value, but often use valuation tools only for underwriting new business. Significant increases in re-build costs over time and improvements to individual properties that are not reported may negatively impact the overall ITV of the insurer’s portfolio. AIR’s ITV analyses are an ideal solution for an insurer to assess the level of underinsurance in its portfolio and to provide evidence of an adequately valued portfolio to a reinsurer.

“In the aftermath of the 2004 and 2005 hurricane seasons the industry recognized the importance of exposure data quality,” said Uday Virkud, P.E., senior vice president at AIR Worldwide. “Of the many risk parameters that impact catastrophe loss estimates, replacement cost is one of the most significant as it can directly impact the modeled loss estimates. AIR’s ITV service will provide critical information to insurers and reinsurers alike that will result in more certainty for reinsurance decisions.”

A property’s replacement value is the full cost to replace the building in the event of a total loss. Since catastrophe models estimate loss by applying vulnerability functions to the replacement value before applying policy terms and conditions, accurate replacement values are essential for obtaining accurate catastrophe loss estimates. If a property’s replacement value is understated by 25 percent, for example, the estimated ground up loss will be understated by that much.

“Most replacement cost estimators require building specific information such as total living area, year built, and other property specific building information to reliably estimate replacement costs,” continued Virkud. “But such details are seldom available for reinsurance submissions, which typically only include street addresses for each risk. AIR’s ITV service with its unique ISO PushPin database is specifically designed to provide realistic replacement cost estimates with just address information.”

AIR’s ITV analyses are conducted using ISO HomeValueTM and the ISO PushPinTM database. The only data required are street addresses of individual properties. ISO PushPin adds specific property information for individual properties. ISO PushPin is a database of objective and detailed residential property data on more than 70 million properties in the United States that can return as many as 17 property features for individual addresses. These property features include total living area, year built, and building type, among others. This data is fed into ISO HomeValue to estimate replacement costs. ISO HomeValue is AIR’s residential replacement cost estimator and is used in underwriting by more than 40 U.S. insurers.

About AIR Worldwide Corporation
AIR Worldwide Corporation (AIR) is the scientific leader and most respected provider of risk modeling software and consulting services. AIR founded the catastrophe modeling industry in 1987 and today models the risk from natural catastrophes and terrorism in more than 50 countries. More than 400 insurance, reinsurance, financial, corporate and government clients rely on AIR software and services for catastrophe risk management, insurance-linked securities, site-specific seismic engineering analysis, and property replacement cost valuation. AIR is a member of the ISO family of companies and is headquartered in Boston with 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

Kevin Long (AIR)
617-267-6645
klong@air-worldwide.com