Praedicat raises $6m for casualty cat model development

Praedicat, a leading casualty catastrophe risk modelling company, has secured a $6 million Series AA round of investment, from sources including existing investor catastrophe risk modelling specialist Risk Management Solutions, Inc. (RMS) and Jacques Dubois.

Praedicat hopes the investment will accelerate its growth, by funding the development of its latency casualty catastrophe models for a wider set of emerging risks and business activities.

“It is increasingly unacceptable for insurers to manage emerging risks by avoiding or excluding them, and Praedicat’s models facilitate growth for our customers by allowing for broader, tailored coverage of emerging risk, and for innovation in new insurance products for latent risks,” explained to Dr. Robert Reville, CEO of Praedicat.

Frank V. McMahon, an investor and a partner at American Discovery Capital, led the investment round and will take a position on the Praedicat Board.

“Liability insurance is a core line for commercial insurance, but it has seen little innovation in 30 years,” commented McMahon. “I’ve seen other insurtech companies seeking to disrupt personal lines insurance, such as auto and renter’s insurance, but Praedicat’s innovative approach to advance commercial liability insurance is refreshing and exciting.”

“Praedicat’s data on emerging risk are also relevant to other industries,” McMahon added. “We see the insurance industry as the foundation of Praedicat’s business, but its risk models are relevant to chemicals, pharmaceuticals, personal care products, and more. This financing round will support that expansion as well.”

Praedicat hopes that its advanced risk models for casualty risks can help insurance and reinsurance interests to protect against a greater range of risks, expanding the scope of the casualty market and providing the necessary models and rigour necessary for the capital markets to become more invested in casualty reinsurance.

Its products can be used to inform underwriting and capital management of casualty risks at property and casualty insurers and therefore help in their reinsurance decisions. The technologies are also relevant to corporations seeking to hedge casualty exposures as well.

The capital markets and certain insurance-linked securities (ILS) funds already allocate to casualty risks, but it remains for now a very small piece of the overall ILS and collateralized reinsurance market.

Praedicat also said that Jacques Dubois, previously a Member of reinsurance firm Swiss Re’s Executive Board and Chairman and CEO of Swiss Re America, has been appointed as the Chairman of the Board. Dubois has been an investor in Praedicat since its launch in 2012. He retired from Swiss Re in 2006.

“Praedicat is entering an exciting new phase,” Dubois said. “Our quantitative models will be used to inform insurance and reinsurance transactions. Not only can Praedicat’s data analytics help insurers grow their casualty business, they will assist insurers in demonstrating to ratings agencies and regulators that they have a thorough understanding of their casualty aggregations. Further, other industries will begin to rely on Praedicat’s insights as well.”

“The long tail of casualty insurance is the next frontier of catastrophe modeling, and Praedicat is at the forefront of that frontier,” added Hemant Shah, CEO of RMS and a member of the Praedicat Board. “With this investment, we continue our support of cutting edge innovation at Praedicat, and for the field of risk modeling as a whole.”