EQECAT Warns on Increased Cat Risks, Models Need Updates

April 4, 2006

Rick Clinton, president of Oakland, Calif.-based EQECAT, Inc., a subsidiary of ABS Consulting, issued a stark warning to insurers, reinsurers, corporations, and government entities, urging them to be prepared for more frequent and severe hurricanes in the Atlantic Ocean, Caribbean Sea, and Gulf of Mexico for the next decade or more.

EQECAT said the importance of catastrophic risk models has greatly increased. “The current forecast, coming after the industry’s difficult 2004 and 2005 hurricane experience, is putting more pressure on companies to improve their understanding of and to aggressively manage their catastrophe risk,” Clinton observed. “As a result, in this potentially much more volatile environment, insurers and others are increasingly and wisely moving to a multiple-model strategy, a plan we have long suggested.”

Clinton disputed the comments by some in the industry that risk models in general are neither sophisticated nor accurate enough. “There has always been uncertainty in the modeling process, which we quantify and help our clients to understand,” he continued. “Therefore, what companies should be looking at is whether their model provides estimates that fall within an acceptable level of uncertainty. With this level of understanding, overall, EQECAT has received positive feedback on our model’s performance from our clients.”

Nonetheless EQECAT is adapting its models to changing conditions to cope with what Clinton said are changes in “risk perception” that have occurred over the last two years. “As the change in weather cycles evolve, so does the perception of risk and EQECAT will continue to take into consideration the underlying factors of those risks to enable our clients to manage their exposures,” he stated.

In addition to further upgrading EQECAT’s hurricane modeling capabilities, Clinton said the company is nearing completion of plans for the release of other optimized modeling capabilities, supported by its innovative WORLDCATenterprise™ platform, to deal with several perils, including flood and earthquakes, as well as to measure the impact of perils on the offshore energy industry.

For additional information abut EQECAT risk models, consult: www.eqecat.com, or call 510-817-3100.

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