Beverly Porter (AIR)
ISO ACQUIRES AIR TO DELIVER NEW DECISION-MAKING TOOLS AS INSURERS AND REINSURERS FACE INCREASING EXTREME-EVENT RISK
JERSEY CITY, NJ, and BOSTON, May 14, 2002 Insurance Services Office, Inc. (ISO) has acquired Applied Insurance Research (AIR), a leading provider of risk-assessment and risk-management technology for all major natural hazards in the U.S. and 40 countries worldwide. The deal signals ISO's and AIR's stepped up commitment to help the property/casualty industry and other industries manage extreme-event losses that are occurring with increased frequency and intensity. Terms were not disclosed.
As a wholly owned subsidiary of ISO, AIR will continue to operate as an independent, stand-alone entity and will maintain its offices in Boston, London, San Francisco and Hyderabad, India. Company founder Karen Clark will continue to head AIR as president and CEO.
"I cannot overstate the value this acquisition brings to the property/casualty industry and many other businesses that need to anticipate and prepare for natural hazards and man-made catastrophes," said Frank J. Coyne, president and chief executive officer of ISO.
The ISO chief executive cited AIR's "outstanding leadership and proven management team" as major reasons for ISO's decision to buy the 15-year-old firm. "AIR stands out because its topflight people make it extremely successful in a business of growing complexity and importance," said Coyne.
After suffering unprecedented losses in the September 11 tragedy, the property/casualty insurance industry faces catastrophes that not only are greater than ever, but also can impact multiple lines of business simultaneously, noted Coyne. "AIR's widely recognized expertise in risk-assessment and risk-management technology and ISO's strength in the property/casualty market, its resources and extensive databases are an ideal combination."
"Together ISO and AIR will develop analytical tools our customers need to make sound decisions about pricing, underwriting, risk transfer, loss mitigation, portfolio growth and future strategies in light of increasing extreme-event risk," said Coyne.
AIR's Clark said she "looks forward to working with ISO to develop new integrated pricing and rating solutions incorporating catastrophe modeling. ISO's massive databases and unparalleled expertise in the property/casualty industry will also enable us to leverage our technology to other lines of business and perils much faster and better than we could on our own," said Clark.
"Property/casualty insurers, reinsurers, risk managers and financial-services entities have come to rely on catastrophe modeling technology to manage extreme-event risk due to natural hazards. September 11 made it painfully clear that lines of business other than commercial and personal property need to be managed with the same sophisticated, scientific technology that companies now use for property business," she said.
Hurricane Andrew in 1992 was the first wake-up call to the industry, and risk management technology has advanced significantly since then, noted Clark. "September 11 was the second wake-up call that makes it imperative for insurers to extend this technology further within their organizations."
"ISO and AIR together possess unmatched resources and expertise that large and small insurers can rely on to manage extreme-event risk efficiently and cost effectively," said Clark.
"Careful catastrophe-loss planning will help companies survive losses from future extreme events. And carriers that have integrated tools to manage extreme-event risk successfully in every phase of their business operations will prosper," Clark said.