Seasonal U.S. Hurricane Forecast Accuracy Varies, Multi-Year Views More in Line With Actual Activity: Aon Re Study

CHICAGO, April 2, 2008 /PRNewswire-FirstCall/ -- As leading hurricane season forecasting organizations begin issuing updated tropical season forecasts for the 2008 Atlantic Hurricane Season, an analysis by Impact Forecasting LLC, a unit of Aon Re Global, found seasonal outlooks for individual years are generally less accurate than when those individual forecasts are measured cumulatively against actual hurricane activity over periods of five years or longer.

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The finding demonstrates the difficulty of seasonal hurricane forecasting and further stresses the importance of insurers, reinsurers and risk managers taking a longer term view of climatic activity.

According to Impact Forecasting's analysis, tropical season predictions released in May 2007 and 2006 by top hurricane researchers at Colorado State University (CSU), the National Oceanic and Atmospheric Administration (NOAA) and Tropical Storm Risk (TSR) overestimated the number of hurricanes and major hurricanes (hurricanes that achieve or exceed Category 3 status on the Saffir-Simpson Scale) that ultimately would form in the Atlantic and Caribbean oceans. The discrepancies between forecasted activity and actual activity have been attributed to the unanticipated levels of dust and dry air that settled across the region of the Atlantic Ocean where tropical systems and hurricanes tend to develop.

2007 Atlantic Hurricane Season Forecasts (May-issued forecasts) Actual 2007 Forecast 25-year CSU NOAA TSR Season Parameter Average Forecast Forecast Forecast Total Named Storms 11.0 17 13-17 16 15 Hurricanes 6.4 9 7-10 9 6 Major Hurricanes 1.2 5 3-5 4 2 2006 Atlantic Hurricane Season Forecasts (May-issued forecasts) Actual 2006 Forecast 25-year CSU NOAA TSR Season Parameter Average Forecast Forecast Forecast Total Named Storms 11.0 17 13-16 14 9 Hurricanes 6.4 9 8-10 8 4 Major Hurricanes 1.2 5 4-6 3 2

"Hurricane season forecasting, which is still a relatively new practice, is difficult due to the complex and dynamic nature of the atmosphere," said Steve Drews, Impact Forecasting associate vice president and lead meteorologist. "These forecasts are built on existing theories about how the atmosphere should respond in certain scenarios, but the outcomes aren't always what is expected. As a result, researchers refine their forecasting techniques every year as new data and discoveries surface."

When analyzing five years of forecasts for named storms, hurricanes and major hurricanes, Impact Forecasting found the forecasts have been quite accurate when compared to average season values.

2003-2007 Atlantic Hurricane Season Forecasts (May-issued forecasts) 2003-2007 Expectation Based on Actual Forecast Historical CSU NOAA TSR 2003-2007 Parameter Averages Forecasts Forecasts Forecasts Total Named Storms 55 77 61-78 68 81 Hurricanes 32 42 34-46 38 41 Major Hurricanes 6 20 14-24 16 20

Steve Jakubowski, Impact Forecasting's executive vice president and chief operating officer, added: "The current forecasting uncertainty within these seasonal hurricane predictions shows that insurers need to have confidence that they are prepared and have a clear understanding of their exposures, not only through accurate and careful policy planning but also through robust catastrophe modeling."

The analysis, contained within Aon Re Global's 2007 Annual Global Climate and Catastrophe Report, utilized May forecasts for the Atlantic Hurricane Season issued by Colorado State University, the National Oceanic and Atmospheric Administration and TropicalStormRisk.com since 2003. These forecasts were compared to what occurred across the Atlantic and Caribbean basins during single years and within a five-year period. The Aon Re Global 2007 Annual Global Climate and Catastrophe Report is available for download at: http://aon.mediaroom.com/index.php?s=63&item=191.

Updated forecasts from two of these units will be issued in the coming days. Colorado State University researchers Dr. Philip Klotzbach and Dr. William Gray will be discussing their upcoming forecast to attendees of the National Hurricane Conference in Orlando this week, while Tropical Storm Risk researchers Professor Mark Saunders and Dr. Adam Lea will be releasing their updated 2008 Atlantic Hurricane Forecast on April 7. NOAA typically issues its Atlantic Hurricane Season forecasts between the middle and end of May.

About Aon

Impact Forecasting is a center of excellence within Aon Re Global, the world's leading and most preferred reinsurance intermediary. Impact Forecasting produces catastrophe analysis and modeling services. Models include hurricane wind and surge, earthquake, tornado and hail, wildfire, and terrorism perils.

Aon Re Global, the world's leading and most preferred reinsurance intermediary, provides clients with integrated capital solutions and services through a world-class network of experts in more than 35 countries. Clients are better able to differentiate and meet their business objectives with Aon Re Global's best-in-class treaty and facultative reinsurance placement services, capital markets expertise, and relevant analytics and technical expertise, including catastrophe management, actuarial, and rating agency counsel. Aon Re Global was named best reinsurance broker in 2007 and 2006 by readers of Business Insurance, in 2007 by readers of US Insurer and in 2006 by readers of Reinsurance.

Aon Corporation is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting, and specialty insurance underwriting. Through its 43,000 professionals worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was ranked by A.M. Best as the number one global insurance brokerage in 2007 based on brokerage revenues, and voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com/.

Media Contacts Rahsaan Johnson David Prosperi 312.381.2684 312.381.2485 Rahsaan_Johnson@aon.com David_Prosperi@aon.com