Lexington, MA — May 4, 2004 — AER, Inc., the largest commercial weather research and development company in the U.S., today announced that their 10-day forecast, eCast™, is now compatible with the Speedwell Weather System (SWS) Vs 4.0, a complete weather pricing and managing system provided by Speedwell Weather Derivatives. Now, clients of the SWS software can gain seamless access to the most highly skilled forecasts available in the industry and use this valuable information in pricing calculations.
eCast™ delivers fifty-one medium range point forecasts based on the European Center for Medium range Weather Forecasts' (ECMWF) Ensemble Prediction System (EPS) for cities in the US and Europe to the SWS software used by traders, brokers, power marketers and re-insurers. SWS clients can receive, store, view and integrate fifty-one daily forecasts out to ten days for each city directly into the rule-based software package designed by SWD. AER provides bias corrected point forecasts from all fifty-one ECMWF model members, which more accurately assesses the variability of the initial conditions that is ultimately responsible for the weather 7 to 10 days out. SWD clients trading in weather derivatives are able to make more informed decisions when they understand the temperature forecast's full range of probabilities and the spread within the range derived from eCast.
"AER's extensive research and development in the statistical interpretation of numerical weather prediction, coupled with the growing demand for integrating probabilistic forecasts seamlessly with pricing scenarios, makes interfacing with SWD software a powerful combination," stated Cecilia Sze, President and CEO of AER.
In addition to interfacing with AER's forecasts, release 4.0 of the SWS software includes new tools and features that support the trading desk's activities more effectively. Traders using SWS Vs 4.0 can now process strips and multiyear deals, hourly index variables, as well as having the ability to build more complex options from simpler structures. They can tailor their index weightings for specific historical years to account for weather events such as El Niño and La Niña, and can use the Copula simulation engine to measure Value at Risk and Credit Risk. There are also a number of improved auditing functions and a new facility supporting ‘point and click' map access to the SWS database for more efficient access to weather stations from various parts of the world.
"Speedwell's software systems combined with AER's forecasts give our clients the edge over the competition. Powerful, statistical pricing algorithms teamed with probabilistic forecasts is a perfect match in the trading environment," said Stephen Doherty, Director of Speedwell Weather Derivatives.
Founded in 1977, Atmospheric and Environmental Research, Inc. is an award-winning environmental research and consulting company addressing the research and science application needs of governmental and industry clients, from the oceans to the planets, from the integration of meteorological systems through the assessment of risk. In addition to its Lexington, MA, headquarters, AER has offices in Omaha, NE and San Francisco, CA. For more information, visit our web site at www.aer.com.
About Speedwell Weather Derivatives (SWD):
Since 1999, SWD has provided software and consultancy services for weather trading professionals. Headquartered in London, SWD has clients in the banking, energy, brokering and insurance markets in Oceania, Europe, North America and elsewhere. The Speedwell Weather System is an open client-server software application providing pricing, risk management and weather exposure analysis and recording of market prices, in addition to full support of front, middle and back office activities for weather derivatives' trading. For more information, please visit SWD's web site.