Swiss Re Financial Products (SRFP) has licensed an updated weather risk trading system developed by Risk Management Solutions (RMS), the California-based technology and data firm.Climetrix version 3.1, as the internet-based application is known, includes a new open database that allows users to import and model temperature, rain, snow, wind and other types of weather data for any location worldwide. The updated Climetrix application also has a ‘one-click’ analysis that RMS said allows for rapid pricing with multiple, customisable models. Version 3.1 also includes flexible reports, allowing users to customise the risk metrics and risk breakdowns included in daily portfolio valuation reports.
SRFP's New York-based weather derivatives trading operation will use Climetrix 3.1 as part of its platform for pricing and portfolio risk management. “Climetrix will be helpful for getting our weather desk up and running as quickly as possible,” said Mark Tawney, managing director of SRFP's weather business. “Once we begin trading, the system will be useful to us for valuing complex transactions which are becoming more common in the market and for accurately tracking our complete portfolio risk."
RMS is hoping to win more clients at a Climetrix seminar it is holding later today at a Weather Risk Management Association (WRMA) conference in Miami.
Although RMS has a significant market share in providing data and trading capabilities for the weather risk industry, other companies are striving to gain business share in the embryonic weather derivatives market. Weather Ventures, a North Carolina-based weather risk technology and data company, today released FxIntegrator, a forecast integrator, and CxMonitor, a climate monitor - the first two applications of its Web-based weather derivatives application, WxDxDecisions.
While weather risk contract pricing software based on historical data is currently available from RMS, Weather Ventures said FxIntegrator is the only widely available service that estimates prices based on forward-looking information. Likewise, CxMonitor uses a temperature simulation model to create conditional probabilistic temperature outlooks for end-of-month, or end-of-season, periods.
AIR, a Boston-based weather risk data company, also has forecasting capabilities used for structuring weather derivatives contracts. Like RMS it is also holding a client seminar at the WRMA conference.
Topics: Swiss Re
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