Aon snaps up LatAm firm to expand catastrophe modelling capabilities

Global re/insurance broker  Aon has expanded its catastrophe modelling and consultancy capabilities in Latin America with the acquisition of a Mexico-based leader in risk assessment modelling.

The acquisition of ERN (Evaluación de Riesgos Naturales) expands Aon's catastrophe modelling suite by introducing earthquake and hurricane modelling for Latin America and the Caribbean.

ERN will join Aon's Reinsurance Solutions business, where it will collaborate with the Impact Forecasting team, whose modelling suite enables firms to analyse the financial impacts of catastrophic events with a view to developing effective reinsurance, underwriting and exposure management strategies.

Over the past decade, Latin America experienced $64.4 billion in insured losses, predominantly driven by tropical hurricanes, followed by earthquake, drought and flooding.

Aon said the acquisition aims to help insurer clients navigate key challenges of natural catastrophe and climate volatility in the tightening reinsurance market ahead of renewals. These are: the increasing cost of secondary perils, the ability to understand an evolving climate, and the need to create a custom view of risk to make better business decisions.

"The acquisition aligns within Aon's global position as a leader in data and analytics solutions for the re/insurance industry, our focus on catastrophe model development in Latin America, and our use of scientific research, academic collaborations and robust analytics to build innovative risk solutions for the public and private sectors," said Keith Lawler, managing director of Aon's Reinsurance Solutions in Latin America.

"We are excited to welcome the ERN team as we together pursue our shared commitment in helping our insurer clients to differentiate themselves, both in their understanding of how climate change and natural catastrophes affect their businesses, and in how they communicate this view of risk to their reinsurance carriers."

Founded in 1996, ERN has developed modelling capabilities that are specific to Latin America. Lawler will serve as CEO of this business and ERN founders Eduardo Reinoso and Mario Ordaz will join Aon as senior scientific advisors.

"Throughout the last 26 years, ERN has built a highly respected brand and has utilized a broad range of modelling platforms that assist clients analyzing many risks," said Ordaz. "Joining Aon can take us to the next level in terms of reach and delivery, contributing even more to reducing possible human and material losses from natural and man-made catastrophes."

The acquisition expands Aon's wider efforts to quantify natural catastrophes and climate risk globally. Aon has recently collaborated with the University of California, Merced and the University of California, Los Angeles to implement the latest climate change science and research into its US wildfire catastrophe model.

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