FloodSmart Re cat bond modeller KatRisk gets acquired

KatRisk, the catastrophe risk modelling software provider and the third-party risk modelling agency for the NFIP’s FloodSmart Re catastrophe bonds, has been acquired by Technosylva, a company focused on wildfire simulation modeling, risk analysis and operational response software solutions.

Technosylva and KatRisk intend to offer clients an integrated approach to risk assessment, prediction, and response solutions across perils including wildfire, flood, severe convective storm, and other extreme weather threats.

Notably, for the insurance-linked securities (ILS) market, KatRisk has acted as the third-party risk modelling agent for all of the FloodSmart Re catastrophe bonds sponsored by the National Flood Insurance Program (NFIP).

That work in the catastrophe bond market began in 2018 and came as somewhat of a surprise to many, as a much less well-known risk modelling firm (to the cat bond market at least) won the contract to model the flood program risks for the Federal Emergency Management Agency (FEMA).

But KatRisk had been working with government agencies, such as FEMA, for a while prior to that, having been founded in 2012 and built a specialism around helping these entities to better understand the catastrophe, severe weather and climate risks they were facing.

As of now, KatRisk has assisted FEMA to secure more than $3 billion of flood reinsurance limit from the capital markets for the NFIP, through the FloodSmart Re cat bond program.

KatRisk currently sits in fourth place in our catastrophe bond risk modellers leaderboard.

The goal is to better support and strengthen the evolving needs of clients such as electric utilities, the insurance and reinsurance industry, financial institutions, and government agencies.

Technosylva has been expanding its severe weather focus, most recently in a collaboration with CenterPoint Energy, which looks to enhance the utility’s resilience against the escalating risks of extreme weather events.

“As the frequency and severity of natural disasters increase, the need for precise, multi-peril catastrophe modeling has become essential,” explained Bryan Spear, CEO of Technosylva. “By uniting our respective strengths in wildfire risk modeling and catastrophe modeling, we are positioned to offer our customers an unmatched suite of tools to anticipate, plan for, and effectively respond to a multitude of extreme weather events. We look forward to further expanding and enhancing these capabilities as we enter our next phase of growth.”

“Our goal has always been to leverage the best available science and technology to protect people, communities and assets,” added Joaquin Ramirez, Founder and Chief Technology Officer of Technosylva. “Joining forces with KatRisk enables us to expand our modeling and analytics capabilities across more types of extreme weather events, providing customers with accurate and actionable insights that are critical to create more resilient societies in a time when extreme conditions have become the new normal.”

“KatRisk’s specialized flood and hurricane models have become indispensable for over 100 of the largest insurance and financial services companies around the world, especially in high-risk areas increasingly impacted by climate change,” Jeffrey Chen, CEO of KatRisk further explained. “Partnering with Technosylva gives us the opportunity to offer a more integrated platform, including providing access to the leading wildfire models in the world, filling a critical need in the industry, and ensuring customers have the insights and flexibility they need to address their specific challenges and adapt to evolving climate risks. We believe this will be transformative, not only for Technosylva and KatRisk, but for our customers and the communities they serve.”

There will be no change to the current suite of products, with both Technosylva and KatRisk continuing to support their existing offerings, while working together to identify and capitalise on new ones.

KatRisk’s current offerings include well-known modelling software SpatialKat and SoloKat. They offer outputs of financial risk simulations for natural disasters, helping insurance companies to quantify and prepare for the impacts of catastrophic events like floods, hurricanes and severe convective storms.

KatRisk aims to expand its offering to cover other types of natural disasters to meet the growing demand for robust and diversified catastrophe models in the insurance and reinsurance industry.