The founding executives of XL Weather & Energy are leaving the company.

They will be replaced on an interim basis by Robert Lusardi, chief executive officer of XL Financial Products and Services, and David Shea, chief financial officer of XL Financial Products and Services, as CEO and COO.

The interim appointments were announced following the decision by XLW&E's current CEO and COO, Jeff Bortniker and Lynda Clemmons, to leave the company at the conclusion of their current employment agreements with XL.

Commenting on these changes, Mr. Lusardi said: "Jeff and Lynda have contributed to an important build-out phase of our XLW&E business and leave behind a talented team of weather and energy professionals.

"This business is now maturing nicely and XL's strategy continues to be focused on being the pre-eminent provider of customer-oriented risk management solutions in weather and energy.

"Jeff and Lynda wish to continue to apply their skills in new and emerging opportunities. They believe that it is appropriate, therefore, that they pursue their goals in a new environment, and we thank them for their efforts."

Ms Clemmons was formerly a trading vice president at Enron, which pioneered the weather hedging business.

Ms Clemmons told The Royal Gazette in January that when Enron approached insurance companies about weather risk management, most said they were more comfortable writing polices protecting Enron from catastrophic events, not from loss of revenue.

"They were uncomfortable writing risk on something that was very likely to happen," Ms Clemmons said.

So Enron got into the hedging business itself, Ms Clemmons said, setting up a trading floor in its Houston office.

A weather derivative contract sets out certain circumstances which a company hopes to avoid. If those weather conditions occur, the derivative pays out to offset the company's business loss for a given period.

While currently used mainly by US energy companies, weather risk management is starting to be used by event management companies who can, for example, insure open-air concerts and sports events from being washed out by rain.

The segment is also seen as having huge potential for the US agricultural industry, although only time will tell whether farmers prefer paying huge premiums to being at the mercy of mother nature.