Moody's announces $2bn RMS climate risk modelling mega-deal

 

Credit ratings and research giant Moody's has announced it is set to acquire climate and natural disaster risk modelling provider RMS in a $2bn deal with the Daily Mail General Trust (DMGT).  

The acquisition, which is expected to be finalised this autumn subject to standard conditions, will expand Moody's insurance data and analytics business to nearly $500m in revenue and bolster its ability to address what the company describes as "the next generation of risk assessment".

RMS operates more than 400 climate and natural disaster risk models covering 120 countries serving the global property and casualty (P&C) insurance and reinsurance industries. In the year ending 30 September, RMS is expected to generate revenue of approximately $320m and adjusted operating income of approximately $55m.

By bringing together the two firms' capabilities, Moody's said the acquisition would help strengthen its integrated risk assessment strategy for customers in the insurance industry and beyond, providing significant new capabilities for analysing climate, cyber, commercial real estate, and supply chain-related risks.

As part of the Moody's Analytics platform, RMS is expected to generate up to $150m of incremental run-rate revenue by 2025, the firm said.

"Today's leaders face a complex, interlinked world of risks and stakeholders," said Rob Fauber, president and chief executive at Moody's. "In the context of a global pandemic, the climate crisis and increasing cyberattacks, our customers must manage a wider range of risks than ever before. We are excited to add RMS and its team of world-class data scientists, modelers and software engineers to the Moody's family to help accelerate solutions that enable customers to build resilience and make better decisions."

Moody's said it would fund the transaction through a combination of cash-on-hand and the issuance of new debt.

Karen White, chief executive at RMS, described Moody's as an "exceptional fit" for the business.

"We share the vision to bring a global, integrated risk assessment platform to our markets with the goals of deeper, more sophisticated risk insights and greater global resiliency," she said. "Within Moody's, I'm confident RMS will be able to accelerate technology and model innovations while combining with Moody's core data and analytics offerings for powerful, holistic solutions."