Willis Places Innovative Australian Weather Transaction
Multi-year protection covers mining firm against cyclone and extreme rainfall risk
London, UK, December 3, 2013 – Willis Group Holdings (NYSE: WSH), the global risk adviser, insurance and
reinsurance broker, has designed and placed an innovative derivative-based risk transfer solution to protect Roy Hill
Holdings Pty Ltd, an emerging global mining, rail and port venture, against the threat of cyclones
and heavy rainfall delaying the construction of what will be the largest single-site iron ore mining
operation in Australia.
The transaction, which was completed ahead of the 2013 cyclone season, is backed by Endurance Global Weather,
a leading global provider of weather risk management solutions and a subsidiary of Endurance Specialty Holdings
Limited (NYSE: ENH).
Under the coverage, Roy Hill is protected from the financial impact of a named cyclone passing through
a specified geographic area which encompasses the company’s 55 million tonne per annum mining, rail and
port project currently under construction in the Pilbara region of Western Australia. The unique “cat-in-a-circle” solution,
structured and executed by Willis’s Global Weather Risk Practice, provides Roy Hill with event coverage based
on the duration that a cyclone spends in the indemnification zone and the amount of cyclone-related
rainfall across three Australian Bureau of Meteorology weather stations.
The transaction, which has a total limit of AUD56million, spans two cyclone seasons and responds to these
objectively defined cyclone and rainfall events occurring during the period of construction leading up to the
mine becoming operational in 2015. The index-based cover differs from regular indemnity cover in that there
is no requirement for the insured to prove any loss or damage to assets from the
cyclone. The indemnity is based purely upon the performance of the pre-agreed cyclone and rainfall indices.
Commenting on the solution, Barry Fitzgerald, Chief Executive Officer of Roy Hill, said: “We are pleased that
our insurance partners have been able to develop such a highly-tailored product to provide prudent risk
management outcomes for the critical development phase of our project.”
Steve Hearn, Deputy Chief Executive Officer of Willis Group, said: “Traditional construction and property policies will cover
the damage caused by a cyclone, but not the financial impact of project delays and additional
wages where there is no damage to the insured assets. This bespoke solution was designed to
cover this traditionally uninsurable risk, which Roy Hill identified as a particular concern.
“Willis leveraged its sophisticated analytical capability to model the probability and impact of cyclones and heavy rainfall
in this region of Australia, enabling Willis to structure and execute a solution led by Endurance
which responds to Roy Hill’s highly specific requirements.”
John Charman, Chairman and Chief Executive Officer of Endurance Specialty Holdings Ltd, commented: “This transformational risk solution
is representative of our strong relationship with Willis globally as well as Endurance’s commitment to creating
strategic partnerships in the emerging Asia Pacific region. Working closely with Willis, we were able to
combine our Global Weather team’s analytic expertise with our longterm capacity and strong balance sheet to
execute an innovative structure specific to Roy Hill’s complex and unique risk exposures.”
Willis Group Holdings plc is a leading global risk advisor, insurance and reinsurance broker. With
roots dating to 1828, Willis operates today on every continent with more than 17,500 employees in
over 400 offices. Willis offers its clients superior expertise, teamwork, innovation and market-leading products and professional
services in risk management and transfer. Our experts rank among the world’s leading authorities on analytics,
modelling and mitigation strategies at the intersection of global commerce and extreme events. Find more information
at our website, www.willis.com, our leadership journal, Resilience, or our up-to-the-minute blog
on breaking news, WillisWire. Across geographies, industries and specialisms, Willis provides its local and
multinational clients with resilience for a risky world.
Willis’s Global Weather Risks Practice advises organisations on all aspects of evaluating, managing and transferring their exposure
to adverse weather. Based upon an analysis of client’s financial performance against historic weather data, the
Willis Global Weather Risks Practice structures and executes bespoke insurance or derivative solutions that reflect the
buyer’s specific exposures, risk management objectives and budget.
About the Roy Hill Project
The Roy Hill project is a major new integrated infrastructure and iron
ore mining project located in the Pilbara region of Western Australia. Currently in the early stages
of construction, the $10bn project is expected to export its first ore in late 2015. The
mine will produce 55 million tonnes of iron ore for shipping per annum. The project includes
the construction of a major mining operation, mine processing infrastructure, a 344km heavy-haul railway, train unloading
and ore handling facilities, and two new purpose-built berths at Port Hedland’s inner harbour.
Endurance Specialty Holdings Ltd. is a global specialty provider of property and casualty insurance and
reinsurance. The Endurance Global Weather team customizes weather-driven risk management products indexed to weather variables and
commodity price indices, offering significant transactional capacity and delivering products as either derivatives or (re)insurance. For
more information about Endurance, please visit www.endurance.bm.