AER Forecast Proves Exceptionally Accurate for 2013 U.S. Heating Demand

AER Forecast Proves Exceptionally Accurate for 2013 U.S. Heating Demand

Forecast from autumn 2012 achieves average error of 1° Fahrenheit, outperforming all public forecast benchmarks

LEXINGTON, Mass.--(BUSINESS WIRE)-- Atmospheric and Environmental Research (AER), a Verisk Analytics (NAS: VRSK) company, today announced that 2013 marks the fourth consecutive winter season for which AER's forecast outperformed public forecast benchmarks in predicting winter temperatures that indicate demand for heating. The forecast's pattern correlation of 0.8 for North America was near a perfect value of 1.0.

While others made predictions for average or warmer than normal temperatures, only AER predicted cold for January, February, and March across the United States, Europe, and Asia.

The late-season cold air resulted in a 16 percent increase in the price of natural gas through March, based on the NYMEX front-month U.S. natural gas contract price. Cold temperatures also delayed the growing season across much of the country, a delay that is beginning to affect prices for new crop corn and soybean contracts.

"AER's performance in 2009 and 2010 piqued the market's interest in AER's methods," said Ron Isaacs, president and CEO of AER. "Our performance over the last four years has clearly demonstrated that this achievement is due to skill, not luck."

"It's difficult to achieve a positive correlation, let alone one that is so strongly positive," said Dr. Judah Cohen, principal scientist and director of seasonal forecasting at AER. "Values exceeding zero are elusive in the industry, and our team at AER achieved a pattern correlation of 0.65 across the entire Northern Hemisphere."

Global energy producers, traders, and portfolio managers all benefit from the AER seasonal forecasts. These organizations use the AER forecasts to strategically plan the extraction, storage, and transportation of energy commodities; hedge commodity investments; and balance their equity portfolios.

"The academic community has developed a strong respect for the work that Dr. Cohen and the AER team do," said Dr. Klaus Dethloff, head of atmospheric circulations at the Alfred Wegener Institute (AWI). "Our scientists regularly interact with AER to understand how their forecast methods are evolving. Dr. Cohen shares with us his seasonal forecasts as they're issued, and the AER winter forecast consistently and impressively outperforms all other winter forecasts."

"The unique aspect of our forecast is that it is physically based, not solely an output of statistics," said Cohen. "Our ability to explain our forecast physically and observe the key transition points of the global climate system two to six weeks in advance of the onset of cold weather has proven invaluable to earning the trust of our clients."

The AER winter forecast, which has been offered since 2000, is informed by the landmark Snow Area Index (SAI). The SAI was developed by AER in 2011 through NOAA and NSF research grants as part of AER's continuing efforts to provide the most accurate seasonal forecasts in the public and private sectors. It is one of the key metrics AER relies on to predict and track the connections in the climate system across the Northern Hemisphere.

The winter forecast is the premier component of AER's comprehensive seasonal forecast solutions. AER issues full forecast updates monthly and provides subseasonal forecasts daily to its licensing clients. AER's forecast team has focused on the 2013 summer forecast since it issued its first full forecast in early February. AER's forecast indicates a high likelihood of above-average temperatures across North America again this summer.

About Atmospheric and Environmental Research

Atmospheric and Environmental Research helps businesses and the government anticipate and manage climate- and weather-related risks. Energy, insurance, and manufacturing firms count on AER to help decrease their weather-related losses and increase profitability by integrating state-of-the-art climate science and weather information into their planning and decision processes. Government agencies such as NOAA, NASA, and the Departments of Defense and Energy rely on AER's scientists to help solve weather- and climate-related problems of vital national importance in energy, environment, national security, and climate change. Established in 1977 and headquartered in Lexington, Massachusetts, AER is a Verisk Analytics (NAS: VRSK) company. Please visit www.aer.com.

Atmospheric and Environmental Research
Brenda Kelly, 1-781-761-2288
bkelly@aer.com

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