Kemper Insurance and Aquila, Inc. Join Together To Expand Global Markets for Weather Risk Management

Business Wire, May 1, 2001

Business Editors

ATLANTA--(BUSINESS WIRE)--May 1, 2001

Kemper Insurance Companies, Aquila, Inc. and its wholly owned affiliate Aquila Re Ltd. announced today they have formed a strategic alliance to expand the global market for weather derivatives and weather risk management products.

"The market for weather risk management is large and growing," says Ed Mills, president of Aquila, Inc, adding, "we already have a well established weather derivative business and expect our relationship with Kemper will allow us to reach a broader range of customers."

"It's fitting that we are launching our relationship with Aquila at the Risk and Insurance Management Society's (RIMS) 39th Annual Conference & Exhibition," says Dennis Kane, president and CEO of Kemper Casualty Company - a unit of the Kemper Insurance Companies. "Weather risk products allow risk managers to expand their impact to a broader range of their organization's risks and reduce the variability in their bottom line results," Kane adds.

Weather risk products are used to offset the adverse affects of abnormal weather on the revenues or expenses of businesses.

Industry segments that can benefit from this type of coverage include energy, agriculture, construction, entertainment, beverage manufacturers and distributors or any other organization whose bottom line results can be significantly impacted by weather conditions.

"Energy companies have been using weather risk products to mitigate the impact that cool summers or warm winters can have on the use of electricity or natural gas, and consequently their revenues and bottom line," notes Tom McCarthy, senior vice president, Kemper Solutions. "Other businesses are now beginning to consider how they can use the same concepts to help manage the variability in their revenue or expense caused by the weather," McCarthy adds.

Aquila's family of weather derivative products is marketed in North America and Europe under the GuaranteedWeather(R) brand. Kemper will market similar weather risk products in the United States, but in an insurance form.

"Through this alliance we intend to build a diversified, global weather risk portfolio, which will allow us to counter balance unusual weather conditions around the world and provide attractive pricing to customers," explains Brian O'Hearne, president of Aquila Re, Ltd.

The two companies also plan to create an insurance oriented version of Aquila's recently launched web site, GuaranteedWeather.com, which will allow users to structure and price customized weather coverage for more than 300 locations globally.

Aquila is a pioneer in the weather marketplace, having provided the energy industry's first weather hedge in the summer of 1996. Kemper entered the weather business in 1999.

Kemper is a leading provider of property/casualty insurance and risk management services with 2000 revenues totaling approximately $4.8 billion and assets of $9.4 billion. Headquartered in Long Grove, Ill., Kemper operates nationwide and in many foreign markets. The Kemper Insurance Companies are "A" rated by A.M. Best, Standard & Poor's and Moody's. For more information about Kemper, visit http://www.kemperinsurance.com.

Aquila is one of North America's leading wholesalers of electric power and natural gas, and provides extensive risk management services to energy markets. Aquila transacted the first weather derivative with a weather indexed power contract in 1996. Aquila is 80% owned by Utilicorp United. (UtiliCorp: NYSE listed UCU; Aquila, Inc.: NYSE listed: ILA).