AIR Worldwide Corp. (AIR) has provided risk modeling and analytical services for more than 80% of the $2.1 billion of catastrophe bonds issued to date in 2009. AIR Worldwide has modeled the risk profile for eight securities covering North America and Europe, providing cover for such perils as tropical cyclones, earthquakes, extra-tropical cyclones (winter storms), severe thunderstorms and wildfires. The instruments employ a variety of trigger types, ranging from parametric to indemnity, modeled loss and LAZR (Long-Term Aggregate Zonal Reinsurance).
“As the industry continues to evolve, AIR is committed to supporting the development of innovative transactions,” says David Lalonde, FCAS, FCIA, MAAA, SVP at AIR Worldwide. “Not only has AIR expanded the scope of perils and trigger types used to model a wide range of insurance-linked securities, but we have continued to be innovative in helping non-insurance organizations, such as governments, transfer risk.”
AIR has been the modeling and calculation agent for many significant insurance-linked securities transactions this year, including “MultiCat Mexico 2009 Ltd.,” a partnership between The World Bank and Mexico to help manage catastrophe risk from multiple perils more effectively.
“Using a parametric trigger structure, MultiCat Mexico 2009 will provide cover against multiple perils—losses from certain size earthquakes as well as Pacific and Atlantic hurricanes,” says Salvador Perez, risk analysis director, Ministry of Finance, Government of Mexico. “AIR’s models provide the foundation for modeling catastrophes in areas like Mexico that are seeking to use alternative risk transfer mechanisms to place their risk directly in the financial markets.”
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