EQECAT Releases the First High Resolution Tornado/Hail Catastrophe Model; New Model Reveals Potential For $11 Billion Industry Loss.

Business Editors/High-Tech Writers

OAKLAND, Calif.--(BUSINESS WIRE)--June 9, 2004

EQECAT, Inc. has announced the release of its U.S. Tornado/Hail/Straight Wind model, for assessing and managing insurance risk associated with these key natural hazard perils. The model is the latest addition to EQECAT's comprehensive WORLDCATenterprise(TM) catastrophe management software suite, which includes natural hazard and man-made perils in 88 countries, including U.S. models for earthquake, hurricane, windstorm, wildfire, flood and terrorism risk.

Tornado and hail are among the most devastating natural hazards, accounting for 46% of all U.S catastrophe losses since 1949. As recorded by Property Claims Service, the industry losses from the May 3-4, 1999 events in Oklahoma were estimated to be $1.6 billion. The EQECAT model reveals that if a similar storm system were to occur in a populated area such as Dallas, Texas, the losses to insurers could exceed $11 billion. "With the potential for multi-billion dollar insurance industry losses, EQECAT recognized the need to provide the insurance industry with a better catastrophe-modeling tool to manage this exposure," said Richard Clinton, president of EQECAT. "We believe that our new model is another example of EQECAT's technology leadership and ability to provide solutions through innovation."

Tornado/Hail Model Simulates More Events Than Legacy Models

Recent advances in weather data collection have made it possible for EQECAT to develop the first high resolution tornado/hail insurance model. Due to the extremely concentrated footprint associated with tornado touchdowns, a high resolution model is the only way to reliably quantify and manage tornado and hail risk. EQECAT's goal was to create an innovative model that would properly estimate loss potential from these severe weather systems, some of which can produce dozens and even hundreds of tornado touchdowns and hail streaks over several days. The net result is a tornado/hail model that employs 800,000 stochastic events that simulate over 20 million tornadoes and 60 million hail streaks to enable the most refined analysis of risk available.

Tornado/Hail Modeling Presents Special Challenges

"Modeling tornado and hail loss presents special challenges in the development of a refined and accurate model", said Dr. Mahmoud Khater, EQECAT's chief technology officer. "Tornado touchdowns are geographically very small and are infrequent in any one area. In addition, the overall geographic area exposed to tornado-hail risk is very large. As a result, the model must include a large number of stochastic events to accurately represent the risk to individual locations, or to highly concentrated books of business", said Dr. Khater. "Older models simply do not simulate enough events to model the risk at a refined level of detail. This causes model bias that often results in a significant underestimation of the real exposure," said Dr. Khater.

"Another challenge was to provide heightened analysis speed, despite an increase in the number of events being modeled as compared to older models," said Dr. Khater. "Fortunately, EQECAT's innovative modeling technology makes this possible. EQECAT's model can complete a detailed tornado and hail analysis for a large portfolio in less than 1 day, which we believe is considerably faster than legacy models" said Dr. Khater.

The EQECAT Tornado/Hail model is available for immediate delivery. If you would like more information, please call [phone] or e-mail inquiries to [e-mail] or refer to www.absconsulting.com, or www.eqecat.com. websites.

EQECAT Serves Global Insurance, Business, Financial Services 

EQECAT, Inc. an affiliate of ABSG Consulting Inc., serves the global property and casualty insurance industry, major multinational corporations and financial institutions. EQECAT is known as the technical leader and innovator in the development of analysis tools and methodologies to quantify insurers' and major corporations' exposure to natural and manmade catastrophic risk.

It is a recognized industry thought-leader providing the expertise and real-world tested tools to turn risk-theory into innovative actions and solutions to effectively manage extreme-risk worldwide. EQECAT's flagship product, WORLDCATenterprise is a multi-user platform to evaluating insured risks for multiple natural catastrophe perils in 88 countries.

EQECAT was founded in 1994 and is headquartered in Oakland, California. ABSG Consulting Inc., headquartered in Houston, Texas, has risk-management revenues of more than $140 million, and more than 1,000 employees worldwide. For additional information, please log on to www.absconsulting.com, or www.EQECAT.com.