managing weather risk is smart business…
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Managing Weather Risk is Smart Business…. - PowerPoint PPT PresentationTRANSCRIPT
Managing Weather Risk is Smart Business…
In 1994, when temperatures remained below zero for the first two weeks of January, Debevc said he lost 20 percent of everything he had planted. “We lost all our Chardonnay vines and about two-thirds of our Riesling,” he said. “We had to replant, and it took three years for them to produce. But then we only had seven acres of vinifera. Now we have 65 acres.”
Weather is Making Headlines...
Extreme freeze damages Ontario vineyards - decanter.com-13 hours ago. “Freezing temperatures across Ontario have damaged vines in the Canadian province's vineyards, with some producers reporting bud loss of around 90%...’Our winery has 95 to 98% bud loss, so we won’t be getting grapes this year,’ says Tom O’Brien, owner of Cooper’s Hawk Vineyards in Lake Erie North Shore...”
Ashtabula County grape growers prepare for huge lossesThe Star Beacon-Mar 29, 2014. “We will not know the amount of damage to the vines until we warm up...”
Ohio wine grape losses hit hardest in Northeast ... - Cleveland.com - The Plain Dealer-Mar 24, 2014 - CLEVELAND, Ohio -- Ohio grape growers – the spark of our fast-growing, $500 million wine-tourism industry -- are expecting a near-total loss ...”
Winter's wrath threatens grape crop in Chautauqua County - Buffalo News-Feb 13, 2014. “The bud damage means a smaller crop for wine grapes this year...”
Who is eWeatherRisk?
• We are a weather risk platform that provides real-time weather risk management solutions.
• eWeatherRisk’s weather data is independently sourced and independently verifiable, and comprises over 6,000 ground-based NOAA/NWS weather stations.
• Multiple risks, dates and structures can be used, all simultaneously and all independent.
• eWeatherRisk’s products are backed by MunichRe, a AA- Standard and Poor’s rated international reinsurer with over $17B in assets.
What is a Weather Hedge?
• A risk contract that provides any business a method to mitigate financial risk from adverse weather events.
• Weather contracts are used extensively by large corporations to manage weather risk. eWeatherRisk brings the same program to all businesses.
• There is no adjuster - it pays when the chosen weather event happens.
• Temperature and precipitation can be covered for any date and condition.
• Weather contracts complement traditional crop insurance, or act as a stand-alone solution for those in related businesses or uninsurable crops.
Bottom line: Provides a new risk management tool.
Weather Risk Solutions…
Weather contracts provide unmatched flexibility, pricing and delivery in real-time, incorporating nearly 65 years of weather data from over 6,000 ground-based weather stations and supported with the financial security of an S&P-rated AA- international reinsurer.
Weather Contracts Cover:
Temperature
• Excessive Heat• Insufficient Heat• Excessive Cold• Insufficient Cold
Precipitation
• Excessive Precipitation• Insufficient Precipitation• Highest Daily Rainfall in Period
A full complement of standard and hybrid weather risk contracts are available.
What types of products are available?
Client specific weather risk. Weather protection to exact needs.
The eWeatherRisk platform allows for maximized pricing and flexibility.
Low Temp(
⁰
F) -13 -14 -15 -16 -17 -18 -19 -20 -21 -22 -23 -24 -25Payout -$ -$ -$ 2,500$ 5,000$ 7,500$ 10,000$ 12,500$ 15,000$ 17,500$ 20,000$ 22,500$ 25,000$
Winter Kill on Grapes Protection
Winter Kill On Grapes
Ohio
Weather Station Chardon
Contract Value $25,000
Start Date 11/1/14End Date 3/31/15
Average Low Temperature in Period (
⁰
F)-11
Historical Low Temperature in Period (
⁰
F)-26
Payment Begins Below (
⁰
F) -15Contract Value Paid At (
⁰
F) -25
Payout per Degree $2,500
Rate 16.04%Price $4,010Cost Per Acre $40.10
100 Acres @ $250/Acre of Protection
Precip Amount (inches) 10.0 10.5 11.0 11.5 12.0 12.5 13.0 13.5 14.0 14.5 15.0 15.5 16.0
Payout -$ -$ -$ 2,500$ 5,000$ 7,500$ 10,000$ 12,500$ 15,000$ 17,500$ 20,000$ 22,500$ 25,000$
Excess Rainfall on Grapes Protection
Excess Rainfall On Grapes
Ohio
Weather Station Chardon
Contract Value $25,000
Start Date 5/1/14End Date 6/30/14
Highest Precipitation in Period 15.84Average Precipitation in Period 8.42Payment Begins Above 11.00Contract Value Paid At 16.00
Payout per 1/10 Inch $500
Rate 21.29%Price $5,322Premium Recovery At 12.06Cost Per Acre $53.22
100 Acres @ $250/Acre of Protection
Heat on Grapes
Heat Units 35 45 55 65 75 85 95 105 115 125 135 145 155Payout 1,126$ 3,378$ 5,631$ 7,883$ 10,135$ 12,387$ 14,640$ 16,892$ 19,144$ 21,396$ 23,649$ 25,000$ 25,000$
Heat on Grapes
OhioWeather Station Chardon
Contract Value $25,000
Start Date 7/1/14End Date 8/15/14
Daily High Temperature Threshold (
⁰
F)86
Average Heat Units* in Period 27Maximum Heat Units in Period 141Payment Begins Above 30Contract Value Paid At 141
Payout per Heat Unit $225
Rate 21.94%Price $5,485Cost Per Acre $54.85
100 Acres @ $250/Acre of Protection
What are the advantages of using weather contracts?
Weather risk can be effectively managed.
Benefits
• Adaptable - The program is built by growers!
• Cost-effective - each weather solution is customized to the customer
• Hassle-Free - No proof of loss required.
• Transparent - weather data available daily via the web
• Protects: • input costs• profitability • forward contract delivery
obligation• allows for more profitable
marketing decisions
Features
• Coverage - 6,000 ground-based US weather stations
• Flexibility - Ability to customize transactions to specific weather risks
• Timeliness - Settlement can be executed within days.
• Availability - No sales closing period and advance purchase discounts are available.
• Security - eWeatherRisk is backed by a AA- S&P-rated international reinsurer.
Managing Weather Risk is Smart Business…
Brian O’Hearne | President & CEO | [email protected] Jubb | Vice President – Marketing | [email protected] Coleman | Senior Analyst | [email protected]
eWeatherRisk, Inc.5251 West 116th Place, Suite 204
Leawood, Kansas 66211800 603 3605
Questions and Answers