By Jorge Casuso

March 15, 2012 -- For the first time in its 64-year history, the Santa Monica-based RAND Corporation will launch a company to apply its technology research for commercial application.

Praedicat, Inc.-- started by RAND, Risk Management Solutions, Inc. (RMS) and private investors -- will provide consulting services and software to the property and casualty insurance industries, RAND officials said Wednesday.

"The RAND Corporation is committed to pursuing innovative ways to extend the reach of our research and analysis," said Michael D. Rich, president and CEO of RAND. "This new venture will help us reach new audiences with solutions and expand RAND's positive impact on society."

The company will extend a field of analytics called "catastrophe risk modeling" used by the insurance industry and other financial markets "to manage the property and casualty risk posed by natural disasters such as hurricanes, earthquakes and terrorist attacks," according to statement issues by RAND on Wednesday.

"The creation of Praedicat builds off of multi-year research and development projects by RAND and RMS on the identification and prioritization of emerging risks using modeling and cutting-edge computer science," RAND officials said.  

RAND officials expect to start with about a dozen employees headquartered in Culver City. James A. Thomson, RAND's former president and CEO, will serve as chairman of the Praedicat board of directors.

Praedicat tested its models to gauge "liability catastrophes" -- catastrophes such as asbestos or climate change for which businesses or people may be held liable -- with several leading insurance and reinsurance firms while the technology was under development at RAND and RMS, officials said.

"Asbestos had a devastating impact on the workers exposed to it, and it also had a devastating financial impact on insurers," said Robert T. Reville, a senior economist at RAND who will be the CEO of Praedicat.

"With the emerging catastrophe risk technology that RMS and RAND have developed, the casualty insurance industry should be able to better manage man-made catastrophes while helping their clients avoid them," Reville said.

"Modeling has transformed underwriting and catastrophe risk management decision-making for the property insurance market," said Hemant Shah, a director of Praedicat and president and CEO of RMS, the leading provider of products and services for the financial management of global catastrophe risk.

Praedicat will take these innovations "to the leading edge of an industry trend of deeply embedding analytics and models to increase risk-adjusted profitability," Shah said.

Along with Thomson, Reville and Shah, Praedicat's board will include Siddhartha Dalal, chief technology officer of RAND, and Jacques Dubois, a private investor and former chairman and CEO of Swiss Re America Holding Corporation.

Started in 1948 as Project RAND -- an outgrowth of World War II -- the renown non-profit think tank transitioned under Thomson's leadership from focusing on defense issues to sponsoring research into such disparate fields as the causes of obesity, terrorism, the response to Hurricane Katrina and urban decay.

RAND has expanded from Santa Monica and Washington, DC to the United Kingdom, Belgium, Mexico and in the Middle East, as well as Pittsburgh and Boston.