Model Leverages New Scientific Research
on “Transitioning” of Hurricanes

Newark, Calif. – February 12, 2003 — Risk Management Solutions (RMS), the world’s leading provider of products and services for the management of catastrophe risk, today
launched the third generation of its U.S. Hurricane model, the first such model to fully represent the physical processes of hurricanes that impact the U.S.

Among other enhanced features, the model incorporates new research into the phenomenon of “transitioning storms” – storms that particularly affect the Atlantic coast north of
Cape Hatteras and that exhibit different characteristics from pure hurricanes, with distinct implications for loss estimates. As such, the RMS model is both a hurricane and a transitioning storm model – the first of its kind in the catastrophe modeling industry.

RMS announced the new model release at its “New Perspectives on Catastrophe Risk” client conference in Carlsbad, Calif. More than 400 insurance and reinsurance industry
representatives are attending the conference to learn about the new models.

Taking advantage of significant advances in hurricane observational data and research over the past five years, the RMS(TM) U.S. Hurricane model uses ultra-high resolution modeling
techniques and in-house research on storm behavior and building vulnerability. The model uses a proprietary, basin-wide event generation methodology to simulate hurricane events throughout their entire life cycle, providing a scientific foundation for determining the correlation of losses for storms that strike more than one region. In addition, hurricane windfields in the model are calculated at 15-minute time intervals along the storm’s path, reflecting changes in wind direction, upwind surface roughness, and intensity as a storm passes. Additional losses associated with coastal storm surge inundation are also modeled for each storm at a resolution as fine as 100 meters. Losses for both wind and surge are calculated using new component-level vulnerabilities, differentiated based on state-level differences in building code requirements and enforcement.

Dr. Jenni L. Evans of the Pennsylvania State University, a leading researcher on the meteorology of extratropical
transition, gave a keynote lecture on this topic at the RMS conference. “Our research into precisely how and why tropical cyclones transition, or ‘change phase,’ to extratropical status has yielded essential insights into the behavior of this breed of storms,” said Dr. Evans. “The phenomenon is not rare – almost 50 percent of Atlantic tropical storms undergo extratropical transition. Given the particular risks that transitioning storms can pose to population and property centers in the northeastern U.S., it is critical to understand their most relevant features and the potential losses – as well as how these deviate from purely tropical systems.”

“Traditionally, hurricane models have been unable to
adequately explain historical losses in the Northeast, which were consistently lower than expected using standard hurricane windfields,” said Dr. Robert Muir-Wood, managing director of global risk modeling at RMS. “Most hurricanes approaching the northeastern coast of the U.S. are transitioning.

These storms exhibit different characteristics from hurricanes. Among them, reduced windspeeds for a given central pressure, a faster forward speed, and damaging winds shifting
entirely to the right of the track, all yielding different losses from pure hurricanes. The new research at RMS on the impacts of extratropical transition will change how companies underwrite and manage hurricane risk, particularly in the northeastern U.S.”

Other new products being introduced at the RMS conference include:

  • New versions of the RMS earthquake models for the western
    U.S. and western Canada
  • The RMS(TM) Offshore Platform model, which applies RMS’
    probabilistic hurricane technology to assess risk to
    offshore oil and gas platforms in the Gulf of Mexico
  • The RMS(TM) Builders Risk model, which enables underwriters to
    analyze earthquake and hurricane risk by phase of
    construction for the full suite of probabilistic U.S.
    catastrophe events
  • Upgrades to the company’s RiskLink? and RiskBrowser?
    software platforms to enable the new models and incorporate
    new features requested by users

About RMS

Risk Management Solutions is the world’s leading provider of products and services for catastrophe, weather, and enterprise risk management. More than 400 leading insurers, reinsurers, trading companies, and other financial institutions rely on RMS models to quantify, manage, and transfer risk. Founded at
Stanford University in 1988, RMS serves clients today from offices in the U.S., Europe, and Japan. For more information, visit our web site at http://www.rms.com.

RiskLink and RiskBrowser are registered trademarks, and RMS and the RMS logo are trademarks of Risk Management Solutions,
Inc. All other trademarks are property of their respective owners.