Bermuda-based Element Re, a subsidiary of XL Capital, has concluded its first international deal: a policy to protect the German utility provider Elektrizitatswerk Dahlenburg AG from any adverse economic effects from excessive rainfall during the summer months.
The weather risk management product covered by Element Re will reimburse the utility if its revenues drop below a certain threshold because of too much rain. The reasoning behind the coverage is Dahlenburg’s customer base, which includes a large agricultural sector, many of whom pump water during summer months, and use a lot of electricity. Too much rain means less pumping, and less use of electricity, which affects the utility’s revenues.
Element Re CEO Lynda Clemmons stated: “this deal demonstrates that weather risk management can be used to help mitigate a wide variety of risks. It’s also exciting for us as a company because it signals our first foray into Europe, a market that’s maturing rapidly and in which we expect to be very involved.”
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