Leading cat risk modelling firm acquired for $2bn by Moody's

Moody's has become the first of the rating agencies to expand its offering into risk modelling services, by acquiring one of the big three firms of this type for $2 billion.

Moody's has entered into a definitive agreement with Daily Mail and General Trust to acquire  RMS (Risk Management Solutions), which provides advanced solutions for insurers, reinsurers, and other organisations. It will fund the transaction through a combination of cash-on-hand and the issuance of new debt.

The risk modeller had been looking for a suitable buyer following a "number of enquiries from third parties".

The acquisition, expected to close in the late third quarter of 2021, will increase Moody’s insurance data and analytics business to nearly $500 million in revenue and will accelerate the development of the company’s global integrated risk capabilities to address the next generation of risk assessment.

The deal builds upon Moody’s and RMS’s complementary customer bases and capabilities in the life and P&C insurance and reinsurance segments. Moody’s offers risk and finance solutions for life insurers, such as pricing, capital management, financial and regulatory reporting capabilities.

" Moody’s is an exceptional fit for RMS and our customers,” said Karen White (pictured), chief executive officer of RMS. “Global risks are now more complex, connected and systemic. Climate change and catastrophic events like extreme weather, pandemics and cyberattacks have broader and more harmful impacts across virtually all industries. We share the vision to bring a global, integrated risk assessment platform to our markets with the goals of deeper, more sophisticated risk insights and greater global resiliency."

She added: "Within Moody’s, I’m confident RMS will be able to accelerate technology and model innovations while combining with Moody’s core data and analytics offerings for powerful, holistic solutions. The team and I are excited to bring new value to customers as we transform how we are able to understand and mitigate the future of risk."

Rob Fauber, president and chief executive officer of Moody’s, commented: "Today’s leaders face a complex, interlinked world of risks and stakeholders. In the context of a global pandemic, the climate crisis and increasing cyberattacks, our customers must manage a wider range of risks than ever before. We are excited to add RMS and its team of world-class data scientists, modelers and software engineers to the Moody’s family to help accelerate solutions that enable customers to build resilience and make better decisions."

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