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EQECAT Post-Landfall Estimates of Insured Onshore Losses From Hurricane Gustav

Posted on: Tuesday, 2 September 2008, 15:00 CDT

EQECAT, Inc., the leading authority on extreme-risk modeling, Tuesday afternoon (Eastern Time) said, based upon current assessment reports of damage caused by Hurricane Gustav, and additional post-landfall data regarding the storm's characteristics, it has reduced estimated onshore insured losses to a range of $3 billion to $7 billion, primarily in Louisiana, from an initial landfall estimate Monday of $6 billion to $10 billion.

EQECAT said it has not changed its estimate of damage and disruption related to production of crude oil and natural gas offshore in the U.S. Gulf of Mexico. "We are reviewing additional information from energy companies and other sources, but continue to anticipate shut-in production for the next year will not exceed about 5 percent of the production capacity for crude oil, and 5 percent of production capacity for natural gas," said Tom Larsen, senior vice president. "The offshore estimates exclude any potential damage to onshore refineries, which we also will assess in coming days as information becomes available," he said.

EQECAT's estimates will be updated as additional information about the storm's characteristics, and on-the-ground observations by assessment teams, become available.

Beyond wind damage to commercial and residential fixed structures, such as office buildings, factories , warehouses, and homes, EQECAT's insured loss estimates include business interruption, as a result of the destruction of property; and demand surge, which occurs when the demand for products and services to repair damage significantly exceeds the regional supply. Thus, these products and services may have to be brought to the region quickly from distant points, resulting in additional costs for transportation, packaging and manufacture.

Excluded from EQECAT's insured loss estimates are losses related to flooding, private and commercial automobiles and similar vehicles.

Energy Disruption Estimates Based Upon EQECAT's Offshore Energy Model

EQECAT's estimates of the impact on offshore energy were developed through its Gulf of Mexico Offshore Energy Model (OEM). This model helps oil and gas producers, insurers and reinsurers to manage hurricane risk for offshore assets. Currently, the model covers exposures in the U.S. Gulf of Mexico. The EQECAT OEM was launched in May 2007 and is based on rigorous science, engineering research, and robust mathematical methodologies.

EQECAT Representatives Available For Commentary

Representatives of EQECAT, headquartered in Oakland, will be available to provide commentary. For additional information, please contact Eric Samansky, The Samansky Group, at 516-319-0858.

EQECAT Software Enables Clients Worldwide To Assess, Manage Wide Range Of Risks

EQECAT and its parent ABSG Consulting Inc. (ABS Consulting) serve the global property and casualty insurance industry, major multinational corporations and financial institutions. EQECAT is known as the technical leader and innovator in the development of analysis tools and consulting services to quantify exposure to natural and man-made catastrophic risk.

Through its extreme-risk modeling software platform, WORLDCATenterprise(TM), EQECAT enables clients to assess and manage potential damage and loss from wind, earthquake, flood, wildfire, and terrorism, among other perils. WORLDCATenterprise(TM) includes 177 natural hazard software models for 89 countries spanning six continents.

EQECAT was founded in 1994 and is headquartered in Oakland, California. For additional information, please visit www.absconsulting.com and www.EQECAT.com.

Source: Business Wire

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