NEWARK, Calif. - February 10, 2014 RMS, the world's leading catastrophe modeling firm, today announced that it has released new views of risk for U.S. and Canada Severe Convective Storm (SCS) and China Typhoon. The new versions of these models provide enhanced risk differentiation, pricing and portfolio- management capability for two perils that are increasingly becoming drivers of annual and catastrophe losses for the industry.
“Recent seasons have shown that SCS losses are a material risk to the industry with a trend of increasing claims severity over time,” said Dr. Claire Souch, senior vice president, business solutions at RMS. “Our new SCS model shows that average annual losses from tornado and hail events now rank a close second to hurricane-driven losses, proving this peril is a material risk to the industry.”
RMS’ new view of risk is calibrated with the results of the company’s extensive analysis into location-level claims and exposure data, together with thousands of hail and wind observations and radar images from more than 70 new industry events that occurred in the past five years. The new insights will enable re/insurers and brokers to use the model output with confidence in their business decisions.
“The recent outbreak of U.S. severe convective storms have provided us with additional insight into the behavior of tail events. This has enabled us to reduce the uncertainty in the new model’s one in 100 return-period losses and provide an enhanced differentiation of risk between regions,” said Dr. Souch.
The model also incorporates new insights into the spatial nature of hail and tornado strikes to provide a more accurate view of the risk than ever before. Hundreds of new vulnerability curves have also been calibrated with new data to provide model users with greater confidence to write new lines of business or in new locations.
At the core of RMS’ U.S. SCS model is a unique, hybrid methodology that combines the strengths of numerical and statistical modeling techniques with historical data and claims calibration. The methodology enables RMS to fill in the gaps and manage the biases that are associated with incomplete historical data records. This enables model users to evaluate the potential future losses in regions where they have not sustained losses to date to inform their company’s business growth strategies and portfolio planning.
RMS’ China Typhoon model covers losses from storm-surge driven coastal flooding, rainfall-driven flood and wind to provide a complete view of China typhoon risk – a region where flood can contribute up to 80 percent of the total risk.
“The storm-surge potential along the Pearl River Delta and in Hong Kong is underestimated by the industry. This is a region that is experiencing major growth, but much of it is below sea-level,” said Dr. Souch.
RMS' typhoon model includes coastal flood for the entire China coastline. The model embeds a state-of-the-art fully dynamical storm surge model for Hong Kong that takes into account the complexities of the coastline: the water flows in and out of the harbor, including tides and the flood defenses of this coastal city, which represent a major exposure and risk concentration.
“Hong Kong is similar to New York in that it has a combination of high concentration of exposure at risk, a complex coastline, multi-directional water flows associated with the harbor and a network of flood defenses that require very detailed modeling,” said Dr. Souch.
For China, where almost 15 percent of the insured market is under construction, RMS has developed a specialized Builders Risk vulnerability model. The new model helps model users to characterize the unique vulnerabilities of buildings during each phase of the building construction. Underwriters can quantify risk by project type, construction class and construction phase.
Similarly, as a major global industrial manufacturer, China has a growing proportion of large industrial facilities. RMS' industrial facilities model has been developed to enable users to model property damage and business interruption from wind and flood-related Typhoon damage for these high-value complex combinations of construction and vulnerability.
“The 2014 version-modeled losses have been calibrated using 10 years of event loss data from 50 percent of the market. The large amount of industry data sourced for our China Typhoon model has helped to make great strides in reducing model uncertainty,” said Dr. Souch.
Newark, CA – December 15, 2020 – RMS, the world’s leading catastrophe risk solutions company, estimates insured losses from the record-breaking western U.S. wildfires this season will be between US$7.0 and US$13.0 billion. These losses reflect estimates as of December 1, 2020 and represent an update from the previously estimated losses from fires up to September 20, 2020. The ignition of the highly damaging Glass Fire and additional spread of the CZU and LNU Complex Fires represent the most notable activity in California since September 20. RMS insured losses represent estimates from major wildfires in California, Oregon, Washington, and Colorado at December 1, 2020: Region Insured Losses (USD $ bn) as of 1 December, 2020 Northern California Oregon and Washington Colorado 5.0 - 9.0 1.0 - 3.0 Up to 1.0 The RMS estimate includes losses from property damage, including evacuation and smoke damage, business interruption (BI), and additional living expenses (ALE) across residential, commercial, and industrial lines. Smoke and evacuation are expected to be significant contributors to losses for the wildfires this season, contributing about 20 percent of losses in California and Colorado and about 35 percent in Oregon and Washington. The estimate also accounts for notable post-event loss amplification (PLA) from property damage (25 to 30 percent) and business interruption/ALE (up to 100 percent or greater). The RMS loss estimate is based on detailed modeling of fire spread, ember accumulations, and smoke dispersion of the fires utilizing the U.S. Wildfire High-Definition (HD) Model, part of the North America Wildfire HD Model suite, released in February, 2019. The model covers the entire contiguous U.S. and explicitly simulates ember and smoke to support detailed analysis of the impact of a wildfire beyond historical fire perimeters. The model’s findings were supported by Damage Inspection Specialist (DINS) damage surveys for California Fires, published damage reports from federal and respective state agencies for the Oregon, Washington, and Colorado fires, and the RMS U.S. Wildfire Industry Exposure Database. Michael Young, Vice President, Product Management said: “2020 represents the most destructive fire season on record, in terms of burn area in California. Since August, 69 major fires that exceeded 1,000 burned acres each, have burned so far. Five of the six largest ever California wildfires have occurred in 2020, with over 4.4 million acres burned in total to date. While fires earlier in the season were dominated by ignitions sparked by the intense lightning storm in August, extreme wind-driven fires dominated the last few months. A similar phenomenon resulted in record-breaking fires in Oregon as well this season, with over 20 major fires driven by extreme winds, burning more than 1.2 million acres so far. In October, Colorado experienced its three largest destructive fires with more than 24 major fires burning 850,000 acres in total. Rajkiran Vojjala, Vice President, Model Development said: “This wildfire season reaffirms the growing catastrophic nature of this peril. Wildfire risk is clearly evolving, not only in California, but also in other states, as we observed in Oregon and Colorado. While changing climate patterns have significantly influenced the record-breaking fires this season, several other factors also profoundly affected the ignition potential and expected losses from these events in different ways. Most notable amongst them are the Public Safety Power Shutoff (PSPS) measures undertaken by utilities, preparedness and response of firefighters in Northern California despite COVID-19 challenges, and recent legislative actions governing wildfire claims settlement such as the California Senate Bill 872. RMS is currently engaged with various stakeholders in evaluating these factors and understanding their impact on the emerging risk profile of this peril as part of its wildfire modeling agenda.” END The technology and data used in providing this information is based on the scientific data, mathematical and empirical models, and encoded experience of scientists and specialists. As with any model of physical systems, particularly those with low frequencies of occurrence and potentially high severity outcomes, the actual losses from catastrophic events may differ from the results of simulation analyses. RMS SPECIFICALLY DISCLAIMS ANY AND ALL RESPONSIBILITIES, OBLIGATIONS AND LIABILITY WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE INFORMATION OR USE THEREOF, INCLUDING ALL WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL RMS (OR ITS PARENT, SUBSIDIARY, OR OTHER AFFILIATED COMPANIES) BE LIABLE FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY DECISIONS OR ADVICE MADE OR GIVEN AS A RESULT OF THE CONTENTS OF THIS INFORMATION OR USE THEREOF.
London, UK – 23rd Nov, 2020 – RMS, the world’s leading catastrophe risk modeling company, collaborated with Willis Re Securities and Securian Financial to launch the new La Vie Re Limited (Series 2020-1) mortality catastrophe bond providing US$100m of reinsurance protection for Minnesota Life Insurance Company, a Securian Financial affiliate. RMS acted as the modeling agent on the cat bond transaction, providing a view of the risk covered by the bond to investors. RMS used its suite of excess mortality and morbidity models, covering infectious disease pandemics, terrorism, earthquakes, and other perils, including a contribution to the expected loss from the COVID-19 pandemic. Covering the U.S., this is the first indemnity 144A excess mortality bond that models the cedants’ portfolio on a loss ratio basis. The notes being issued by La Vie Re were launched to cat bond investors, and the full US$100m principal was achieved with a coupon price of 2.85%. Jin Shah, Client Director, RMS, said: “Investors have warmly welcomed Securian Financial as a new sponsor to the ILS market. Likewise, RMS is pleased to support another new issuer secure reinsurance protection from the ILS market with a novel structure and trigger. Using our life risk modeling capabilities, RMS developed an indemnity trigger on loss ratios and supported investors’ understanding of the risk, especially on the contribution from the current COVID-19 pandemic. The pandemic outlooks reflect the latest research on vaccine availability, efficacy and distribution, and how this may mitigate the impact of a second, winter wave of COVID-19 infections threatening regions where strict social distancing measures have been relaxed. It was a pleasure to collaborate with Securian Financial and Willis Re Securities and it’s great to see the ILS market continue to support innovation in the market.”
NEWARK, CA – October 27, 2020 – RMS, the world’s leading catastrophe risk modeling company, announces the appointment of Patrick (Pat) McCarthy as Executive Vice President of Sales and Client Development, with immediate effect. Pat will lead this global organization for RMS, and brings a successful track record of delivering meaningful innovations and high-value solutions to some of the world’s most revered enterprises. Pat joins RMS from SAP, where most recently he was Senior Vice President and General Manager of SAP’s Ariba and Fieldglass businesses, focused on enterprise supply chain optimization and risk reduction. He also supported customers as they moved from legacy solutions to SaaS, always with an eye on value creation. Pat had been at SAP for 15 years in various senior roles including as COO for a large part of the US business, the Midwest Market Unit. Prior to SAP, Pat spent seven years at Oracle in various leadership roles spanning sales, industry, and solution roles in its JD Edwards and PeopleSoft businesses. Pat started his career with ten years at Frito-Lay and Pepsi-Co, where he held several management roles. Pat will report directly to RMS CEO, Karen White. Karen White, Chief Executive Officer at RMS, said: “Pat is joining at an exciting and challenging time in our industry and at RMS. He is exceptionally strategic and has earned his stellar reputation for bringing mission-critical innovations and solutions to global customers. Pat’s impressive approach to deeply understanding the markets and enterprise customers he serves, with an eye on helping them to innovate and on their business outcomes, is aligned with RMS’s mission to be a strong strategic partner for our customers. Pat’s formidable experience supporting global customers as they leveraged leading-edge technology and solutions to advance their businesses will be a great asset to RMS and the customers we serve.” Pat McCarthy added: “I’m very excited to be joining RMS as it’s an honor to work for a company so focused on building resilience into businesses and economies. For 30 years, RMS’s science and models have been the most trusted view of risk in the industry. It’s more important now than ever before that clients have access to the best modeling science and platforms, helping them drive business results that exceed their expectation. I’m pleased to be leading a team that continues to leverage our core strengths and simultaneously maps out a future with our clients that leverages innovations and the latest science as we tackle the future of risk.”