Catastrophe modeling firm Risk Management Solutions (RMS) has an extremely “strong pipeline of models” that will be launched in the coming years and executives argue that the delay and development costs of its single-platform product RMS(One) are being managed closely.
“[I] think there are 44 models in various stages of development at RMS. We’ve never had so much development going on, it’s extremely well led,” said Martin Morgan, CEO of Daily Mail and General Trust Plc, RMS’ corporate parent, during its annual earnings call.
Morgan added that many if the 44 models he referred to will be launched after next year, although some products are closer to completion. “In HD models, there are two more to come which are largely complete already which is Japan Typhoon and New Zealand Earthquake, both of which are significant because of the complicated perils that they model,” he explained. “That model pipeline stretches out further, it’s not going to impact ‘16.”
The development of new models will assist in RMN’s earnings growth targets, which have been hindered by the one year delay of its RMS(One) platform and the associated costs.
“I think you combine those two things and a renewal rate of 95% or more, than those of us [who] are perhaps a bit concerned about the impact of the RMS(one) not being launched last year on the core business, I think we certainly feel very assured that RMS is in very good shape in its core ongoing business,” Morgan said.
Costs associated with RMS(One) development, as well as consolidation in the reinsurance sector and slow down in catastrophe bond issuance, is keeping DMGT executives cauious about stronger growth targets for the catastrophe modeling firm.
“I know we’ve ended well but there are headwinds of consolidation and the cat bond market, so again we think it’s wise to be suitably cautious at the start of the year and highlight low single digit growth rather than mid digit growth but we shall see,” added Stephen Daintith, DMGT finance director
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