Praedicat is joining Moody’s
I have very big news. Today, Praedicat has been acquired by Moody’s and I couldn’t be more delighted. Joining the Moody’s family represents the culmination of over twelve years of work building an outstanding team, establishing a new type of risk modeling focused on casualty catastrophes, and humbly learning from our insurance industry clients how to turn our analytics into value in their workflows. But increasingly, the vision of a rigorously data-driven casualty insurance market requires the next level of solution, and Moody’s brings us to that next level and beyond.
It all began about 15 years ago with an idea that liability insurance needed an analytical solution to emerging risk. Our thinking was that the solution was going to be similar to what Moody’s RMS does for natural catastrophes in property insurance. We also thought some brand new technologies, machine learning and natural language processing, might help. A team of us (working at RAND and RMS) developed prototypes. We showed them to insurers, who said “Yes! That could be interesting!” We left our familiar and comfortable jobs and started Praedicat, with RAND and Moody’s RMS investments to launch us.
What followed was twelve years of incredibly hard work learning how to run a company, building product, and working with clients to merge our ideas with the realities of their businesses. We were scrappy and trying to do big things with small budgets. Along the way, my cofounders Dave Loughran, Lisa Gallagher, and Adam Grossman, together with a growing team of scientists, engineers and modelers have become the best group of friends and colleagues that I could have ever wished for. The clients were appropriately demanding and sometimes brutal in their feedback, but as we met their needs and they saw that there was a better way to approach emerging risk, they stuck with us and made us great. We never pivoted, but we never stopped experimenting with new ideas to get to our vision.
Meanwhile, the casualty emerging risk environment worsened. New mass torts like RoundUp and PFAS, formerly twice-a-decade events, became twice-a-year events. Climate casualty became a new and unpredictable leg of the climate risk stool along with increased natural catastrophes and transition risk. Amidst a wave of reserve restatements, it has become clear to casualty insurers that a new way of approaching emerging risk is urgently needed.
The solution to this risk-strewn casualty landscape is better data and forward-looking casualty catastrophe modeling. The modeling is now battle-tested, and deploying it will transform the emerging risk problem into a growth opportunity for the industry in coming years. We expect to see a transformed casualty insurance market, with casualty cat loading in pricing, and a casualty cat reinsurance market. We expect to see the acceleration of the entry of capital markets into casualty. With changes in European liability and a global litigation finance market, we expect the need for an analytic solution to casualty risk globally. This is a very big opportunity for everybody in the market, and frankly, it requires more than what we can do on our own.
With Praedicat joining Moody’s, we will meet the challenge. The core of Praedicat’s solution is translating emerging risk into company risk. Moody’s market-leading data on global companies and technologies to extract, combine and deploy the data will allow us to expand our solution to cover the globe with precision and high accuracy. Among exciting new capabilities planned are loss modeling for public and private D&O insurance, global loss estimates for general liability insurance, and robust capabilities for portfolio loss modeling delivered into the underwriting, pricing and reserving workflows. Moody’s vision of integrated risk assessment promises to unlock new insights from our models and facilitate new capabilities like property-casualty clash risk, a serious and growing phenomenon. Moody’s dedication to science-based solutions and rigor is an excellent cultural fit. I believe the match couldn’t be better, but I suppose it shouldn’t be surprising because Moody’s RMS was in our DNA when we started.
Any transition will have a hint of the bittersweet. We won’t be counted among the promising Insurtech startups anymore. We won’t be a scrappy, under-resourced innovator punching above our weight. Within Moody’s, we’ll have a new identity as the company that transformed casualty, delivering on the vision we started with. That feels amazing.
You can learn more about the acquisition and read the press release by visiting the Moody’s website. You can also find additional information on the Praedicat website.