Hurricane and Disaster Insurance

1

• Hurricane and Disaster Insurance
• FDIC Rural Finance Seminar
• May 23, 2008

Joseph B. Cole, Ph.D.Managing DirectorRenRe
Investment Managers Ltd
2
Renaissance Re (RNR) Organizational Structure
2
3
Weather Predict Consulting (WPC) Expertise to
Quantify Risk

• WPC Science Team
• Meteorology
• Oceanography
• Climate Science
• Wind Engineering
• Aerodynamics
• Computer Simulation
• Environmental Mapping

WeatherPredict Global and Climate Modeling,
Super Ensemble Forecasting Long-range Climate
Forecasting Short-range Global Weather
Forecasting Agricultural / Energy Analysis and
Forecasting Real-Time Tropical Cyclone
Forecasting Accurate Environmental Forecasting
Oceanographic and Tropical Modeling
Expertise High-resolution, multiple nested
Tropical Cyclone (TC) modeling Seasonal Atlantic
Index Forecasts Footprint model for land-falling
TCs State-of-the-art Oceanic Eddy
Forecasting Consulting Partnerships Wind
Vulnerability Modeling Mitigation Technology
4
Dynamic Tropical Cyclone Modeling

• Numerical Weather Prediction (NWP)
• Computer simulation of the atmospheric physics
• Proprietary NWP models based on NHCs GFDL
  Hurricane Forecast System
• Movable nested grid
• Improved physics
• Coupled ocean- atmosphere
• Worldwide coverage
• Leading skill in TC track/intensity forecasting

4
5
Super EnsembleTM Weather Forecasting Technology
Forecasts are produced by atmospheric models run
by various meteorological agencies
6
Real Time Tropical Cyclone Modeling
Satellite Photo of Typhoon Wipha (9/18/07)
7
Typhoon Wipha Example
Forecasts made Mon 17 September 00 GMT
All AFGI and JTWI forecast tracks
8
Typhoon Wipha Example
9
MPCI Growth in the United States
9
10
Market Structure by Segment, Participant and
Policy Type
10
11
Key Factors for Risk Indexation

• Easy to Understand
• Rainfall
• Temperature (CDD, HDD, GDD)
• Soil Moisture
• Hurricane Landfall Intensity
• Verifiable
• Represents Value of Risk
• Independently Replicable
• Competitively Determined
• No price fixing
• No governmental interference or intervention
• Frequent Price Dissemination
• Lack of Hedging Alternatives

11
12
Comparative Analysis of Soybean Crop Insurance
Risks
12
13
Comparative Analysis of Soybean Crop Insurance
Risks
13
14
Potential Crop Risk Management Policies in China
14
15
Potential Disaster Risk Insurance Policies in
China

• Producer Indemnity Contracts
• Premium subsidies similar to other countries
• Yield based
• Record keeping integrity
• Potential for Revenue based contracts
• Provincial Risk Management
• Disclosure of rating methodologies
• Indemnity based reinsurance
• Indexed or Parametric reinsurance potential
• Area Yield, Weather or Revenue based
• Access to historical yield data
• Agribusiness Risk Management
• Area yield or revenue based insurance
• Sold through Chinese crop insurers with
  international reinsurance support
• National Catastrophe Risk Policies
• Property/Catastrophe insurance

15