Visitors to the RMS and ERisk websites have free access to the detailed information regarding the risk-based economics of various business lines within the U.S. P&C insurance sector. The industry study utilizes RMS and ERisk’s P&C RAROC (Property & Casualty Risk-Adjusted Return on Capital) framework to provide the basis for evaluating risk, capital, and shareholder value across all risk types and activities.

Major findings from this study include these interesting facts:

• The industry as a whole is overcapitalized by 20-30%.
• The industry segment earning the greatest RAROC is stock companies specializing in personal lines and using agents as a distribution channel - at over 15%.
• The average RAROC for the P&C industry is 10%.
• Risk-Adjusted Return on Capital for the P&C industry indicates that average returns are low and skewed in favor of non-catastrophe lines of business.
• The attribution of economic capital by risk type varies dramatically by industry segment.
• The diversification benefit across risk pillars reduces the economic capital required for the industry by 32%.

The study released today is presented in two parts: 1) an executive-level presentation which focuses on industry-wide findings, and 2) an interactive software component where visitors can query market segment results and view actual economic capital and RAROC statistics. Users can perform detailed industry segment comparisons and assess returns for specific business lines that interest them. Peter Nakada, Vice President of Business Development at ERisk, offers the following analysis scenario to describe the utility of the interactive tool: "Our latest research provides lots of interesting drill-down and exploration of industry data. Let's say that your business uses both agent and direct distribution channels and you're interested in seeing average risk-adjusted profitability by segment for these channels. With just a few clicks of the mouse, the RMS and ERisk study will provide the relative profitability of different lines and show which ones on an industry basis are more or less profitable." The new study results were originally presented at the Capitalization of the P&C Insurance Industry Seminar sponsored by The Wharton School and updates a previous examination of the capital requirements of the U.S. P&C insurance industry study conducted in 1999.

The interactive P&C industry study is available for free to registered users at http://www.rms.com and http://www.erisk.com.

About the P&C RAROC Partnership

The RMS and ERisk partnership brings two of the world's leading risk management solution providers together, allowing insurers to benefit from the highly complementary skills of these two firms. RMS brings market-leading expertise in catastrophe risk modeling and has over ten years of experience advising insurance executives on risk management issues. ERisk brings strength in modeling asset and non-catastrophe liability risk and experience helping financial institutions apply the P&C RAROC framework in their decision-making processes.

About Risk Management Solutions (RMS)

Risk Management Solutions is the world's leading provider of products and services for the quantification and management of natural hazard risks. RMS clients include leading insurers, reinsurers, trading companies, and other financial institutions. RMS offerings include risk assessment models, software products to access the models, and consulting services. Founded at Stanford University in 1988, RMS employs over 600 people worldwide. RMS is owned by DMG Information, a division of the Daily Mail and General Trust plc media enterprise.

About ERisk

ERisk is the leading full service provider of strategic solutions for enterprise risk management and economic capital allocation. Our core offerings include consulting, risk and capital management analytics, risk transfer advisory services, and the ERisk.com portal. We deliver these offerings to property and casualty insurers, financial services firms, energy companies and non-financial corporations. Our mission is to increase return-on-equity for our clients' shareholders by elevating risk management to an enterprise-wide level and driving capital allocation decisions with our innovative analytics.

Contact:
John Abraham
RMS
(510) 505-2519

Tony Marcos
ERisk
(917) 522-1619

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