AIRWeather Issues Updated Reconstructed Weather Data.

Business Editors/Environment Writers

BOSTON--(BUSINESS WIRE)--Aug. 20, 2002

AIR Worldwide Corporation (AIR), the technological leader in catastrophe modeling and weather risk management, today released its updated reconstructed weather data for stations across the United States. The update by AIRWeather(TM), AIR's weather risk management service, provides weather derivatives traders a consistent and temporally homogenized historical temperature time series for weather stations nationwide. The update accounts for station shifts and station environmental changes that impact historical weather observations.

"In order for the weather derivatives market to function smoothly, it is imperative to address the issues of historical temperature variations on a regular basis," said Mark Gibbas, AIRWeather senior research scientist in meteorology. "Evaluating a weather derivative contract using raw data can lead to devastating financial consequences as historical data can be inconsistent."

"For example, sensors at weather stations are often shifted, which can lead to variations in observations," explains Gibbas. "A weather derivative contract may be written and based on the temperature at a station with 25 years of historical data. If, however, five years ago, that station moved its sensors to a cooler location the result would be five years of cooler observations and 20 years of warmer observations. By using the full 25 years of inconsistent data, the estimate will be biased toward the earlier warmer observations. The historical data will not be representative of estimated future observations, resulting in a flawed derivatives contract. AIRWeather solves this problem by reconstructing the data to represent accurate historical weather observations regardless of station changes."

AIRWeather used its updated, proprietary data reconstruction process for its latest update. The new process involves sophisticated algorithms with improved design to detect variations in temperature resulting from station shifts and environmental changes since 1950.

AIRWeather's reconstructed data involves de-shifting and de-trending the cleaned daily minimum and maximum temperature time series to remove data inconsistencies due to factors unrelated to weather. The new reconstructed data adds 15 more weather stations, bringing the total stations monitored by AIRWeather to 235 in the U.S. alone.

About AIR Worldwide Corporation

AIR Worldwide Corporation (AIR) is a leading catastrophe and weather risk modeling company. Through its web-based and computer software solutions (CLASIC/2(TM), CATRADER(R), CATMAP(R)/2, AIRProfiler(TM) and ClimateCast(TM)), AIR services the insurance, reinsurance and capital markets. AIR's models simulate losses from both man-made and natural catastrophes in more than 35 countries. AIR is headquartered in Boston and has additional offices in North America, Europe and Asia. For more information, please visit the AIR website at www.air-worldwide.com.