2012 Italy Earthquake Webinar for Reinsurance

THE SPRING 2012 ITALIAN EARTHQUAKES To plan for the future we must understand the pastA seminar presented by: The mission of ABS and ABS Group companies is to serve the public interest as well as the needs of our clients by promoting the security of life and property and preserving the natural environment.

MAY 2012 EARTHQUAKES NEAR BOLOGNAA series of earthquakesin Emilia Romagna, Italyin May 2012– Caused multiple fatalities– Economic damage estimated from €5 to €10 Billion– Insured Losses estimated in the (€) hundreds of Millions What can we learn from this event to better anticipate the next earthquake?

BOLOGNA EARTHQUAKE 2012• Today’s presentation – The earthquakes and regional seismicity – Building codes and practices – Building damage – causes and mitigation – Regional risk – what does the “big one” look like

TODAY’S PRESENTERS• Tom Larsen, Product Architect, EQECAT• Paul Thenhaus, Senior Geologist, EQECAT• Brad Eccles, Principal Engineer, ABS Consulting• Nathan Gould, Director and ELSR Chief of Technology, ABS Consulting• Kent David, Vice President, EQECAT

GEOLOGICAL AND SEISMOLOGICAL SETTINGThe 20 May 2012 Emilia Romagna EarthquakeEQECAT EARTHQUAKE BRIEFING: 26 June 2012Paul C. ThenhausSenior GeologistEQECAT, Inc.

2012 EMILIA ROMAGNA EARTHQUAKE SEQUENCE ~ 50 KM May 20, 2:03 GMT, M6.0 May 20, 13:00 GMT, M5.1 May 29, 7:00 GMT, M5.8 May 29, 11:00 GMT, M5.3 May 29, 11:00 GMT M5.1

USGS COULOMB STRESS TRANSFERMay 29, M5.8 aftershockoccurred in a region ofincreased stress due to theMay 20 mainshock.

INTERNATIONAL FOCAL MECHANISM SOLUTIONS: 20 MAY 2012 EMILIA ROMAGNA EARTHQUAKEThrust faulting on aWNW-ESEoriented fault plane.

CROSS-SECTION OF THE SOUTHERN PO PLAINSHOWING ACTIVE BLIND (BURIED) THRUST FAULTS

EMS-98 INTENSITY DISTRIBUTION

PREDICTED INTENSITIESPredicted intensities giventhe May 20 earthquakemagnitude and location from theSirovich et al. (2009) method.

THESE INTENSITIES WERE NOT SURPRISING!Municipalities in theepicentral area had along history ofintensity VI+earthquake shaking! (From Decanini et al., 2012)

PEAK GROUND ACCELERATIONS RECORDED

PREDICTED 475-YEAR PGA HAZARD ON ROCK Areas Prone to Amplification (From Vanini et al., 2007)

ACTIVE FAULT SOURCES OF ITALY

MAJOR EARTHQUAKES IN ITALY SINCE 1900 Date Location Fatalities Magnitude Capo Vaticano, Calabria 08/09/1905 527 7.9 (offshore) 28/12/1908 Messina, Sicily 70,000 7.2 13/01/1915 Avezzano, Abruzzo 32,610 7.0 29/06/1919 Mugello, Tuscany 100 6.3 07/09/1920 Garfagnana, Tuscany 171 6.4 23/07/1930 Irpinia, Campania 1,404 6.5 15/01/1968 Salaparuta, Sicily 260 6.5 Gemona del Friuli, Friuli– 06/05/1976 1,000 6.5 Venezia Giulia 23/11/1980 Irpinia, Campania 3,000 6.5 26/09/1997 Annifo, Umbria 11 6.4 06/09/2002 Palermo, Sicily (offshore) 2 6.0 31/10/2002 San Giuliano, Molise 29 5.9 06/04/2009 LAquila, Abruzzo 295 6.3

MOST OF ITALY HAS MODERATE TO HIGHSEISMIC HAZARD

CONCLUSIONS1. The 20 May 2012 Emilia Romagna earthquake occurred in a region of recognized moderate seismic hazard.2. The mainshock event ruptured a blind thrust fault in the southern Po Plain in a region of known active thrust faults.3. Over a period of nine days, the mainshock triggered a series of aftershocks that extended ruptures both east and west over a distance of approximately 50 km.4. The earthquake and its aftershocks came as no surprise: hazard maps previously defined the hazard, ground motion amplification was expected in Po Plain, municipalities in the epicentral area had long histories of intensity VI+ earthquake effects.5. Most of Italy is characterized by moderate-to-high seismic hazard: The country has a long history of devastating earthquakes.

EQECAT Risk Quantification and Engineering (RQE)Paul C. ThenhausSenior GeologistEQECAT, Inc.pthenhaus@eqecat.comwww.eqecat.com/

Overview of Seismic Design Regulations for ItalyDr. Brad EcclesPrincipal EngineerABS Consulting Ltd.

SEISMIC DESIGN HISTORY IN ITALY• First design regulations were introduced in December 1908• As a response to the 1908 Messina Earthquake• M 7.1• 90,000 fatalities• Only applicable to Calabria region• Applicable to new design and repair of damage Reference: Italian seismic hazard: experiences and new building code application, Roberto W. Romeo, Associate Professor of Seismic Risk, University of Urbino, Italy

SEISMIC DESIGN HISTORY IN ITALY 1908 to 1980 • A series of new regulations were introduced following significant earthquake events • RD 573/1915, RD 431/1927 and RD 640/1935 • Only applicable to affected regions • Differentiation of High and Moderate Risk • Applicable to new design and repair of damageReference: Italian seismic hazard: experiences and new building codeapplication, Roberto W. Romeo, Associate Professor of Seismic Risk,University of Urbino, Italy

SEISMIC DESIGN HISTORY IN ITALY1981 to 1984• First formal hazard definition based on scientific studies• 475 year return period hazard• 3 discrete hazard zones• Northern Italy was largely not considered Reference: Seismic classification of the Italian territory (1984). MLP Decree of 14/07/1984 and subsequent decrees, National Institute of Geophysics and Volcanology, http://zonesismiche.mi.ingv.it/

SEISMIC DESIGN HISTORY IN ITALY1984• Horizontal Force Fh = CRIW• Importance Factor – 1.4 - civil protection, 1.2 – high risk occupancy, 1.0 - others• CR – horizontal force coefficient ( S − 2) C= 100

SEISMIC DESIGN HISTORY IN ITALY2003• First formal study to expressly define seismic hazard levels to consider in design for all of Italy• This increased the seismic loading for new build• This was in preparation for the introduction of Eurocode 8 in 2004 Reference: Seismic zones of the Italian territory (2003). Order PCM 3274 of 20/03/2003., National Institute of Geophysics and Volcanology, http://zonesismiche.mi.ingv.it/

SEISMIC DESIGN HISTORY IN ITALY Zone Acceleration (pga) 1 0.35 2 0.25 3 0.15 4 0.05• 10% Probability of exceedance in 50 years on hard ground (Vs > 800m/s)• Zone 4 – 5% g which was judged to be lower than other Reference: Seismic zones of the Italian territory (2003). Order PCM 3274 of 20/03/2003., National Institute of Geophysics and Volcanology, loadings http://zonesismiche.mi.ingv.it/

SEISMIC DESIGN HISTORY IN ITALYComparison of 1984 and 2003

SEISMIC DESIGN HISTORY IN ITALYAreas classified as seismic zone Seismic Classification of the Major Cities infor the first time in 2003 Emilia –Romagna Region City 1984 Zoning 2003 Zoning Bologna N.C. 3 Cesena 2 2 Ferrara N.C. 3 Forli 2 2 Modena N.C. 3 Parma N.C. 3 Piacenza N.C. 4 Ravenna N.C. 3 Reggio Emilia N.C. 3 Rimini 2 2Reference: Pericolosità sismica, normativa e zone sismichenell’Aquilano, a cura di C. Meletti e M. Stucchi (INGV-MI), 16 Reference: Order of 20/03/2003 PCM 3274, http://zonesismiche.mi.ingv.it/aprile 2009 , National Institute of Geophysics and Volcanology,http://zonesismiche.mi.ingv.it/

SEISMIC DESIGN HISTORY IN ITALY• Summary in Context• There was no formal seismic design requirement for much of Northern Italy until 2003• Many of the cities were put into Zone 3 with a pga of 0.15g• This level of hazard is not insignificant and will cause damage to structures designed without earthquake loading taken into consideration

Performance of StructuresNathan Gould, D.Sc., PE, SEDirector and ELSR Chief of TechnologyABS Consultingngould@absconsulting.com

PERFORMANCE OF STRUCTURES• In this region of Italy, buildings constructed prior to 2003 likely have little, if any, seismic design• Concrete frames with masonry infill are popular. The infill is typically not accounted for in the design of the lateral force-resisting system• Precast concrete frame construction is also popular in the region. Seismic performance of these systems is dependent on connections• Little attention has been paid to the lateral restraint of non-structural elements

MANTOVA (NW OF THE EPICENTER)

MANTOVA

MODENA (SW OF THE EPICENTER)

MODENA

BOLOGNA (SOUTH OF THE EPICENTER)

INDUSTRIAL SITES (PGA = 0.30 G)

INDUSTRIAL STRUCTURES – SANT’AGOSTINO • Ceramics Storage Building – Steel frame structure with heavy storage loads – Inadequate lateral system – Flexible structure which resulted in large displacementsReference: Decanini, LD, Liberatore L., Sorrentino L, 2012, PreliminaryReport on the 2012, May 20 Emilia Earthquake

INDUSTRIAL STRUCTURES – SANT’AGOSTINO • Precast Reinforced Concrete Industrial Building – Popular type of structure in the impacted region – Historically poor performers in past earthquakes – Performance is dependent on connections and detailingReference: Decanini, LD, Liberatore L., Sorrentino L, 2012, PreliminaryReport on the 2012, May 20 Emilia Earthquake

INDUSTRIAL STRUCTURES – SANT’AGOSTINO • Precast Reinforced Concrete Industrial Building – Failure of connections impacts not only the primary building structure but also the perimeter claddingReference: Decanini, LD, Liberatore L., Sorrentino L, 2012, PreliminaryReport on the 2012, May 20 Emilia Earthquake

INDUSTRIAL STRUCTURES – SANT’AGOSTINO • Precast Reinforced Concrete Industrial Building – Failure of connections supporting the roof framingReference: EPICentre Field Observation Report No. EPI-FO-200512, The 20thMay 2012 Emilia Romagna Earthquake 41

INDUSTRIAL STRUCTURES – FINALE EMILE • Precast Reinforced Concrete Industrial Building – Plastic hinging of the primary columnsReference: EPICentre Field Observation Report No. EPI-FO-200512, The 20thMay 2012 Emilia Romagna Earthquake

INDUSTRIAL STRUCTURES – MIRANDOLA • Collapse of perimeter panels due to connectionsReference: Decanini, LD, Liberatore L., Sorrentino L, 2012, PreliminaryReport on the 2012, May 20 Emilia Earthquake

INDUSTRIAL STRUCTURES – MIRANDOLA • 2005 Precast Concrete Frame Building – Connection failure likely led to partial collapseReference: Decanini, LD, Liberatore L., Sorrentino L, 2012, PreliminaryReport on the 2012, May 20 Emilia Earthquake

INDUSTRIAL STRUCTURES – MIRANDOLA• Partial Collapse• Connection Failures• Stiffness / Geometry Issues Reference: Decanini, LD, Liberatore L., Sorrentino L, 2012, Preliminary Report on the 2012, May 20 Emilia Earthquake

MITIGATION• Initial Step – Understand the vulnerabilities • Structural • Non-Structural • Financial• Develop a Comprehensive Mitigation Approach – Performance Requirements • Life Safety or Continuous Operations – External Factors • Power • Transportation

Mitigation

LESSONS LEARNED• Active seismic region where much of the existing building stock has not been designed for seismic loads• Numerous structural vulnerabilities, many due poor connections and detailing• Little attention is typically paid to the proper restraint of non-structural elements• Loss of structure and/or major non-structural issues leads to large BI exposure

2012 NorthernItaly EarthquakesA modeled view of the eventsJune 26, 2012

MODELING PARAMETERS

EQECAT CATASTROPHIC RISK MODELING Vulnerability ModelHazard Model Exposure Model

2012 EMILIA-ROMAGNA EQ LOSS ESTIMATES Catwatch Estimates: Model Proxy for Event:• €300M to €700M Insured Loss Total (including Event ID – 21773 aftershocks) Epicenter – N44.77 E11.18• Loss estimates highly sensitive to insurance take Magnitude – 6.0 up rate Depth – 12.8 km• Damage estimate of €14.2 B consistent with insurance Mean Damage – 14.2 € B take rates of 2%-5% Sigma Damage – 7.2 € B

EMILIA EARTHQUAKE – FOOTPRINT COMPARISON USGS Shake Map EQECAT Shake Map (MMI) Epicenter May 20, 2012 Hypothetical M 6.0 M 6.0 N44.80, E11.19 N44.77, E11.18 Depth 5.0 km Depth 12.8 km

MODEL INSIGHTS

ITALY WIDE DAMAGE EXCEEDANCE CURVE Emilia (2012) Damage – 14.2 € B RP – 6 Yrs.

CONCENTRATIONS OF CATASTROPHIC EVENTS • Italian Earthquake Z6 Z5 model has 33075 eventsZ7 • 218 events have Z4 damage > = 100 € B • Largest damage Z3 causing event in the Z2 Campania region (40 km east of Naples) Z1 Emilia Earthquake

CONCENTRATIONS OF CATASTROPHIC POTENTIAL Zone No of Min Max Min Max Events Magnitude Magnitude Damage Damage Z5 (€B) (€B) Z6Z7 Z1 10 7.0 7.2 100.4 134.6 Z4 Z2 107 6.0 7.4 100.4 457.8 Z3 5 6.2 7.2 107.6 115.5 Z3 Z4 33 6.4 6.8 100.3 196.5 Z2 Z5 52 6.6 7.2 100.0 169.7 Z6 4 6.0 6.4 100.6 113.6 Z7 7 6.2 6.6 104.1 186.7 Z1 Emilia Earthquake

CONDITIONAL DAMAGE DISTRIBUTION IN POVALLEY Po Valley • Max Modeled Damage in Po Valley – 116.7 € B • May 20, 2012 event 99% NEP of Po events • 50% NEP in Po valley ~€100M 100% 90% 80% 70% Non Exceedance Probability 60% 50% 40% 30% 20% 10% 0% Source: Wikipedia 0.001 0.01 0.1 1 10 100 1000 Damage in Euro Billions

PO VALLEY MAGNITUDE / LOSS SCATTER 140 E2 120 Emilia Earthquake 100 E1Damage in € B 80 60 40 20 0 5.00 5.20 5.40 5.60 5.80 6.00 6.20 6.40 6.60 6.80 7.00 Magnitude Emilia Earthquake

RISK MANAGEMENT

CATASTROPHE MODELING – RISKMANAGEMENT• Portfolio Analysis – Insight into overall economic risk – Identify critical facilities based on PML / expected loss… – Full consideration of uncertainty, quality factors• Detailed Analyses / Evaluations – Business Interruption / Contingent Business Interruption – Facility evaluation / engineering study – Retrofit and risk mitigation

MAY 2012 BOLOGNA EARTHQUAKES• The earthquakes occurred in an area where infrequent, smaller earthquakes are expected to occur• Damage was widespread, concentrated upon buildings based upon older building codes• Strengthening of older buildings can reduce fatalities and disruption from these events• The greater region presents the potential for much larger earthquake losses

INTERACTIVE Q&A• Paul Thenhaus, Senior Geologist, EQECAT pthenhaus@eqecat.com• Brad Eccles, Principal Engineer, ABS Consulting beccles@absconsulting.com• Nathan Gould, Director and ELSR Chief of Technology ABS Consulting ngould@absconsulting.com• Kent David, Vice President, EQECAT kdavid@absconsulting.com

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2012 Italy Earthquake Webinar for Reinsurance

by EQECAT, Inc. on Jun 27, 2012

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