The contract is designed to protect the restaurant against financial loss from colder-than-normal weather from March 1-June 30. The contract will pay out if the maximum daily temperature is less than a pre-agreed level for that month for more than a specified number of days. This is the second year the restaurant has purchased a weather product.
"This deal shows the increased interest in weather risk management in Europe as well as the growing diversity of the market," said Lynda Clemmons, President and Chief Operating Officer of Element Re. "Restaurants can be highly affected by weather and this transaction demonstrates one of the many ways we can create a product to protect them."
Stephen Doherty, CEO of Speedwell, said: "More and more companies outside of the energy sector are coming to us for weather-risk related hedges. And because no two cases are alike, each is specifically tailored to the client's exposure. In this case, it was important to find a partner that could accommodate such a customized product as was necessary to cover all aspects of the Rock Garden's weather risk."
Philip Mathews, owner of the Rock Garden, said: "This is the second year we have entered into a program such as this one. We have identified that if it's cold we don't have as many customers so we definitely see a benefit in managing our exposure to inclement weather."
The derivative written for the Rock Garden is designed to pay out when the temperature is less than or equal to 8.5 degrees Celsius (47 degrees Fahrenheit) in March; less than or equal to 11 degrees Celsius (52 degrees Fahrenheit) in April; less than or equal to 14.5 degrees Celsius (58 degrees Fahrenheit) in May; and less than or equal to 18 degrees Celsius (64 degrees Fahrenheit) in June.
About Element Re:
Element Re is a provider of innovative risk management products that allow businesses to mitigate their non-catastrophic weather risk. For more information, call (203) 356-3580 or visit www.elementre.com.
Element Re is an indirect subsidiary of XL Capital Ltd (NYSE: XL), which, through its operating subsidiaries, is a leading provider of insurance and reinsurance coverages and financial products to industrial, commercial and professional service firms, insurance companies, and other enterprises on a worldwide basis. As of March 31, 2002, XL had consolidated assets of approximately $30.6 billion and consolidated shareholders' equity of approximately $5.4 billion. More information about XL Capital Ltd is available at www.xlgroup.com.
About Speedwell Weather Derivatives (SWD):
SWD is an independent weather risk consultancy that advises companies in the energy and hospitality sectors on their weather risk. For more information call (0044) 207 929 7979 or visit www.WeatherDerivs.com
This press release contains forward-looking statements. Such statements are based on current plans, estimates and expectations. Accordingly, forward-looking statements involve inherent risks and uncertainties and a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement, including, without limitation, that the weather risk management business may not develop to the extent anticipated. The Company undertakes no duty to update publicly any forward-looking statements contained herein in light of new information or future developments.