Moody’s To Buy RMS For Climate, Natural Disaster Risk Modeling

Moody’s Corp. is buying Risk Management Solutions Inc. (RMS), a California company that specializes in predicting what Mother Nature will dish out, for about $2 billion, the companies jointly announced.

The seller is Daily Mail and General Trust PLC.

“The acquisition will immediately increase Moody’s insurance data and analytics business to nearly $500 million in revenue and will accelerate the development of the Company’s global integrated risk capabilities to address the next generation of risk assessment,” a news release issued by Moody’s and RMS stated in the announcement.

RMS, according to the announcement, runs more than 400 risk models predicting natural disasters and extreme weather events in 120 countries.

RMS stated that for the fiscal year that ends Sept. 30, 2021, it expects to generate operating income of about $55 million on revenue of $320 million.

Explaining the rationale for the deal, Moody’s President and Chief Executive Rob Fauber said in a prepared statement: “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.”

RMS Chief Executive Karen White said in a prepared statement: “Global risks are now more complex, connected and systemic. Climate change and catastrophic events like extreme weather, pandemics and cyberattacks have broader and more harmful impacts across virtually all industries. 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.”

The statement from the companies predicted that within Moody’s, RMS will generate “up to $150 million of incremental run-rate revenue by 2025.”

Moody’s said it will pay for the deal by using cash and issuing new debt.

In another move the company partly attributed to extreme weather concerns in a July 13 announcement, Moody’s unveiled new resources to let small and medium-sized businesses assess environmental, social and governance (ESG) risk.

Read more: Moody’s Launches ESG Scoring Tool For Small Businesses