RAND Corporation, Risk Management Solutions Launch New Company to Develop Liability Insurance Tools

For Release

March 14, 2012

The RAND Corporation, Risk Management Solutions, Inc. (RMS) and private investors have launched a company named Praedicat, Inc., that will provide consulting services and software to the property and casualty insurance industries, officials announced today.

The creation of Praedicat builds off of multi-year research and development projects by RAND and RMS on the identification and prioritization of emerging risks using modeling and cutting-edge computer science. Praedicat will have about a dozen employees at launch and expects to locate in Culver City, Calif.

Based in Newark, Calif., RMS is the leading provider of products and services for the financial management of global catastrophe risk. RAND is a nonprofit public policy research organization headquartered in Santa Monica, Calif. Praedicat marks the first time RAND has spun off a new company for commercial application of its technology research.

"The RAND Corporation is committed to pursuing innovative ways to extend the reach of our research and analysis," said Michael D. Rich, president and CEO of RAND. "This new venture will help us reach new audiences with solutions and expand RAND's positive impact on society."

Praedicat will use new approaches to extend a field of analytics called catastrophe risk modeling. These models are used extensively by the insurance industry and other financial markets to manage the property and casualty risk posed by natural disasters such as hurricanes, earthquakes and terrorist attacks. Praedicat is developing "liability catastrophe models." Liability catastrophes are catastrophes with a human cause for which businesses or people may be held liable, such as asbestos or climate change.

"Asbestos had a devastating impact on the workers exposed to it, and it also had a devastating financial impact on insurers," said Robert T. Reville, a senior economist at RAND who will be the CEO of Praedicat. "With the emerging catastrophe risk technology that RMS and RAND have developed, the casualty insurance industry should be able to better manage man-made catastrophes while helping their clients avoid them."

Praedicat tested its solutions with several leading insurance and reinsurance firms while the technology was under development at RAND and RMS.

"Modeling has transformed underwriting and catastrophe risk management decision-making for the property insurance market," said Hemant Shah, president and CEO of RMS and a director of Praedicat. "RMS and RAND, and now Praedicat, are excited to extend this transformation to the casualty insurance market, taking it to the leading edge of an industry trend of deeply embedding analytics and models to increase risk-adjusted profitability."

James A. Thomson, the former president and CEO of RAND, will serve as chairman of the Praedicat board of directors. Along with Thomson, Reville and Shah, the board also will include Siddhartha Dalal, chief technology officer of RAND, and Jacques Dubois, a private investor and former chairman and CEO of Swiss Re America Holding Corporation.

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