Latest Research by AIR Worldwide Scientists Shows Application of Statistics Based Solely on Atlantic Hurricane Activity Can Lead to Overestimation of Risk

BOSTON, Jan. 7, 2008 – AIR Worldwide Corporation (AIR) today announced results of the latest research by its team of scientists into the link between the formation of hurricanes in the Atlantic basin and U.S. landfall activity.  The latest findings provide a context for better understanding the 2004-2007 hurricane seasons and demonstrate that using Atlantic basin activity as a proxy for landfall activity can lead to erroneous estimates of both landfall risk and potential insured losses.

“By only focusing on the 2004 and 2005 seasons, it is easy to forget that every hurricane season is unique and actual landfall activity is a function of complex interactions between a range of environmental factors such as genesis location, sea surface temperatures and the depth of warm ocean waters, wind shear, and atmospheric steering,” said Dr. Peter Dailey, director of research in atmospheric science at AIR Worldwide.  “A higher number of tropical storms in the Atlantic basin does not translate to an equivalent increase in hurricanes or landfalling hurricanes.”

AIR researchers found that a storm’s genesis location, or starting point, greatly influences its probability of making landfall along the North American coastline.  The pattern of hurricane genesis locations changes from year to year and by comparing the pattern for a particular season to long-term climatological patterns, one can better understand why in some years the proportion of storms making landfall is high, while in other years it is low. 

AIR’s research can be used to analyze the landfall probabilities of the two strongest storms of the 2007 season — Category 5 hurricanes Dean and Felix — based on their genesis locations. Dean and Felix, which were the only storms this year to achieve greater than Category 1 status, both took southerly tracks across the Caribbean and eventually made landfall along the coasts of Mexico and Central America.

“Contrary to popular belief, the U.S. did not ‘dodge a bullet’ with respect to Hurricanes Dean and Felix,” stated Dr. Dailey. “Based on where these storms formed and how they would track under typical steering conditions, our research shows that Hurricane Dean had a low chance of making landfall as a hurricane and Felix was much more likely to strike the Mexico or Central America coastline than the U.S.”

Sea surface temperatures in the Atlantic basin have been warmer than average every year since 1995. However, the percentage of Atlantic basin storms that make U.S. landfall as hurricanes has been below the long-term average of 14 percent in nine of those thirteen seasons.  In 2007, only one of fifteen named storms made U.S. landfall as a hurricane, or less than seven percent.  More significantly, total wind energy in 2007 was 33 percent below average despite two Category 5 storms.

“The seasonal forecasters correctly projected that a higher-than average number of tropical storms would form in the basin in 2007,” continued Dr. Dailey.  “But it’s much more difficult to predict not only how many of these storms will become hurricanes, but more importantly how many will make landfall as hurricanes. Like many past seasons, the 2007 season showed that an elevated number of tropical storms does not always translate to more hurricanes or more landfalling hurricanes.  In 2007, sea surface temperatures were not as warm as some scientists expected and significant wind shear suppression by La Niña did not materialize as they had anticipated.  Clearly there’s a danger in assuming that one or two single seasons are indicative of a paradigm shift in hurricane risk. While 2004 and 2005 were both very active seasons, they were not good predictors of activity in 2006 and 2007.”

AIR employs one of the largest teams of professional meteorologists in the world of risk management and will continue to produce transparent, quantifiable and reproducible research on hurricane genesis and steering to provide an improved understanding of the factors that influence hurricane landfall probability. In addition to a standard view of hurricane landfall risk based on over 100 years of historical data and over 20 years of research and development, the AIR U.S. hurricane model includes an alternative view of landfall risk under warm sea-surface temperature conditions.  Under warm ocean conditions, AIR estimates U.S. insured losses to be 15 percent higher than the long-term average.  In some areas, such as the Northeast, AIR expects little difference from the long-term average.  AIR intends to again submit its U.S. hurricane model for certification under the rigorous standards of the Florida Commission on Hurricane Loss Projection Methodology (FCHLPM) in 2008 for the twelfth consecutive year.

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

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