H U R R I C A N E activity

U.S. Hurricane Activity Rates Increases Losses by 40% in Florida and Gulf Coast
Elevated Storm Frequency and Intensity Expected To Persist For At Least Five
Years

NEWARK, Calif., March 23 /PRNewswire/ -- Risk Management Solutions (RMS)
today announced that increases to hurricane landfall frequencies in the
company's U.S. hurricane model will increase modeled annualized insurance
losses by 40% on average across the Gulf Coast, Florida and the Southeast, and
by 25-30% in the Mid-Atlantic and Northeast coastal regions, relative to those
derived using long-term 1900-2005 historical average hurricane frequencies.
This new view of risk is driven by an increase of more than 30% in the
modeled frequency of major (Saffir-Simpson Category 3-5) hurricanes making
landfall in the U.S. to account for current elevated levels of hurricane
activity in the Atlantic basin that are expected to persist for at least the
next five years. When compared with a pre-2004 historical baseline, as has
been previously employed for quantifying insurance risk, the increases in
modeled annualized losses are closer to 50% in the Gulf, Florida, and the
Southeast.
The increased frequency and intensity of hurricane activity in the
Atlantic Ocean Basin, as observed since 1995, are driven by higher sea surface
temperatures in the tropical North Atlantic and by associated changes in
atmospheric circulation. These warmer temperatures are expected to translate
into a continuation of high activity in the basin, leading to a greater
potential for hurricanes to make landfall at higher intensities over the next
five years.
To address this period of elevated frequency and intensity of storms, RMS
consulted with representatives from all segments of the insurance industry and
updated its U.S. and Caribbean hurricane models to provide a 'medium-term'
(five-year) forward-looking view of risk for estimating potential catastrophe
losses. To date, catastrophe model results have been based on a long-term
historical average baseline.

Expert Panel Convened
The RMS medium-term view of hurricane activity was developed in
cooperation with a panel of leading experts in hurricane climatology convened
by RMS in October 2005, which included: Dr. Jim Elsner, Professor in the
Department of Geography, Florida State University; Dr. Kerry Emanuel,
Professor in the Department of Earth, Atmospheric and Planetary Sciences,
Massachusetts Institute of Technology; Tom Knutson, Research Meteorologist,
Geophysical Fluids Dynamic Laboratory, Princeton University; and Dr. Mark
Saunders, Professor of Climate Prediction, Department of Space and Climate
Physics, University College London.
Based on the five-year perspective of this expert panel, RMS developed a
methodology to update activity rates in its proprietary models based on storm
intensity, storm track, and landfall region. This methodology indicates that
increases in hurricane frequencies should be expected across the entire U.S.
coast, but will be highest in the Gulf, Florida, and the Southeast, while
lower in the Mid-Atlantic and Northeast.
"Considerable scientific debate on the reasons for the high state of
current hurricane activity continues among leading climatologists, between
those who view natural, multi-decadal variability as the principal cause and
those who also see a significant influence of global warming," said Dr. Robert
Muir-Wood, chief research officer at RMS. "While the experts convened by RMS
hold different climatological perspectives on the underlying causes of
elevated hurricane activity, they agreed unanimously that a forward-looking
view of risk should reflect a higher probability of land-falling hurricanes
than is represented by long-term historical averages."
This new outlook regarding heightened hurricane intensity and landfall
frequency will be incorporated in the updated RMS(R) U.S. and Caribbean
Hurricane Models, part of the May 2006 release of the RiskLink(R) and
RiskBrowser(R) 6.0 catastrophe modeling platforms. The models will also
contain changes in the modeling of vulnerabilities and post-event loss
amplification effects based on detailed RMS analysis of claims data from the
2004 and 2005 hurricane seasons. RMS will continue to monitor, publish, and
apply the five-year forward-looking view of activity rates, in conjunction
with convening an annual expert elicitation of leading hurricane
climatologists.
"Coming off back-to-back, extraordinarily active hurricane seasons, the
market is looking for leadership. At RMS, we are taking a clear, unambiguous
position that our clients should manage their risks in a manner consistent
with elevated levels of hurricane activity and severity," stated Hemant Shah,
president and CEO of RMS. "We live in a dynamic world, and there is now a
critical mass of data and science that point to this being the prudent course
of action."

About RMS
Risk Management Solutions is the world's leading provider of products and
services for catastrophe 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 .

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

Mark Prindle
TorranceCo, New York
1-212-691-5860
mprindle@torranceco.com

Shannon McKay
RMS, California
1-510-402-3391
shannon.mckay@rms.com

SOURCE Risk Management Solutions
Web Site: http://www.rms.com