D. Matthew Coleman (2005 M.S.)
Reinsurance Analyst
Citadel Investment Group, L.L.C.

I received my M.S. degree in Meteorology from Penn State in May ’05. Since that time, I have been working at Citadel Investment Group, L.L.C., which is a hedge fund based in Chicago, Illinois. A hedge fund is a private investment fund that trades and invests in various assets such as securities (e.g. stocks), commodities (e.g. oil, wheat, gold), currency, and derivatives on behalf of a select group of investors. Hedge funds constantly manage their risk to unforeseen events, including weather events, which is why a hedge fund may employ a meteorologist. The meteorology team at Citadel has the responsibility of communicating weather forecasts and analyses—as well as the uncertainty surrounding such weather information—to various decision makers such as risk managers and financial traders.

Citadel is a multi-strategy hedge fund, and one of its investment strategies includes investing in energy commodities. Energy commodities such as oil, natural gas, and electricity are bought and sold daily. Weather can be a fundamental driver of both energy supply and demand, and ultimately energy prices. For example, a hurricane in the Gulf of Mexico can damage offshore oil rigs, disrupting the supply of oil to the United States. Or, consider an exceptionally cold winter that causes homes and businesses to use more energy to heat their internal space, thereby increasing the overall demand for natural gas. Citadel’s meteorology team has the responsibility of monitoring and forecasting such weather events to help the Energy group manage its risk.

Citadel also invests in Bermuda-based reinsurance companies, which are also susceptible to weather. Reinsurance is essentially insurance for insurance companies—insurance companies often purchase reinsurance to protect themselves from low-probability, high-loss events such as natural catastrophes (e.g. hurricanes, earthquakes, winter storms). Citadel’s Reinsurance Quantitative Research group, of which I am a part, assists Citadel in quantifying and understanding the financial impact that natural catastrophes can have on the Bermuda-based reinsurance companies. As a reinsurance analyst, my primary responsibilities include: analyzing the likelihood that natural catastrophes may cause financial losses to the reinsurance companies and insurance industry; running licensed catastrophe models to better understand the insured loss that natural catastrophes could cause in a particular geographic region; and providing firm-wide natural catastrophe updates to all of Citadel’s business units.

While in the graduate-level meteorology program at Penn State, I structured an interdisciplinary curriculum that allowed me to focus in Natural Catastrophe Risk Management. In addition to taking the required graduate-level meteorology courses, I also took classes in finance, risk management, geosciences, probability and statistics, and insurance. My thesis work explored the potential use and value of seasonal hurricane forecasts to the reinsurance industry.

Prior to attending Penn State, I graduated from the University of Virginia (May ’03) with B.S. degrees in both Chemistry and Environment Sciences. I also spent three summers in Boulder, Colorado, as a research protégé in the Significant Opportunities in Atmospheric Research and Science (SOARS) program.