Natural and man made disasters have caused economic losses of $155bn and claimed over 11,000 lives in 2018, according to new estimates from Swiss Re, the insurance company.
The world has been hit by a large number of catastrophes this year, from an earthquake in Indonesia to typhoons in Asia and wildfires in California.
Swiss Re says that the insurance industry will shoulder $79bn of the losses, making 2018 the fourth most expensive year on record.
The year will be more costly than the ten year average, but will not be as expensive for insurers as 2017, when Hurricanes Harvey, Irma and Maria contributed to $150bn of insured losses.
Swiss Re points out that losses in the two years were driven by similar causes.
In a statement, the insurer said: “The losses from the 2018 series of events highlight the increasing vulnerability of the ever-growing concentration of humans and property values on coastlines and in the urban-wildlife interface. The very presence of human and property assets in areas such as these means extreme weather conditions can quickly turn into catastrophe events in terms of losses inflicted.”
The big question facing the industry now is what impact those losses will have on prices for insurance in 2019. Reinsurers are in the middle of negotiating their 1 January contract renewals with their customers, and there are signs of rates increasing in some parts of the market.
Carlyle joins ranks of potential bidders for Germany’s Osram
Despite profit warnings, lighting technology group had also attracted interest from Bain
Carlyle, the US private equity firm, has joined a growing list of buyout houses considering a €4bn-plus takeover bid for Germany’s Osram, the lighting technology group that was spun out of industrial behemoth Siemens five years ago.
Carlyle’s interest was confirmed by two people with direct knowledge of the situation, who cautioned that there was no certainty the company would follow through with a firm offer. One of these people said Carlyle was taking a “preliminary look” which was at an early stage.
Carlyle declined to comment.
Last month, shares in Osram soared on news that Bain Capital was sizing up a possible offer for the company, whose market value now sits at €3.7bn.
Osram has struggled this year, issuing two profit warnings that have dragged its share price down by more than half. From a peak of €79 in January, they traded as low as €30 last month.
The profit warnings were, to some extent, a broader reflection of woes in the auto sector, where Osram earns half of its revenue.
As car sales in China slow, new emissions standards hit carmakers’ production in Europe and the US threatens a broader trade war, a string of German auto suppliers have issued profit warnings this year, including Continental, Thyssenkrupp and Schaeffler.
Long-term, however, automotive is still expected to be a major driver of growth for Osram. Even if car sales drop from peak levels, its content-per-vehicle — the total of parts and components within a car — is expected to grow.
Osram makes LED headlamps, for instance, which are currently in about 20 per cent of all new cars sold, according to Karsten Iltgen, analyst at Bankhaus Lampe. “That will go to 80 per cent in five years at the earliest and 10 years at the latest,” he said.
Outside of automotive, Osram is increasing its presence in horticulture lighting to enable trends such as indoor vertical farming, in which vegetables are fed with water and artificial lighting to grow within big cities. In consumer electronics, Osram supplies smart watch makers including Apple with sensor components so that users can track their heartbeat.
“Osram is in transition,” said Mr Iltgen. “It used to be a boring lighting company. It’s becoming a cool tech company.”
Interest from Bain and Carlyle has made Osram the second high-profile potential leverage buyout in Germany, after the Financial Times revealed last week that private equity firms are also sizing up bids for Scout24, the online listings company.
Gapping down
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Elon Musk’s SpaceX Is Raising $500 Million in Funding
Investors including Tesla backer Baillie Gifford are valuing rocket company at $30.5 billion
Elon Musk’s rocket company, Space Exploration Technologies Corp., is set to raise $500 million at a $30.5 billion valuation, in a bid to help get its internet-service business off the ground, according to people familiar with the fundraising.
The Hawthorne, Calif., company, known as SpaceX, is raising the capital from existing shareholders and new investor Baillie Gifford & Co., one of the people said. The Scottish money-management firm is one of the largest investors in another Musk-led company, Tesla Inc., with about a 7.6% stake, according to S&P Global Market Intelligence.
SpaceX and the investors have agreed on the financing terms, but the money hasn’t been sent to the company yet, this person said. SpaceX could announce the deal by year-end.
SpaceX investors are paying $186 per share for new stock in the latest funding round, this person said. That is up about 10% from the $169-per- share paid during an April fundraising, according to SpaceX data compiled by private-company analytics firm Lagniappe Labs.
Including this round, SpaceX has raised about $2.5 billion of equity funding, according to Dow Jones VentureSource. Last month it raised $250 million via its first high-yield loan sale.
SpaceX and Baillie Gifford both declined to comment.
SpaceX plans to invest in the company’s nascent satellite internet service, known as Starlink, one of the people said. Initial designs call for it to be powered by a constellation of more than 4,000 satellites orbiting the earth at low altitudes. That is one of two multibillion-dollar projects at the company, including plans to develop the largest rocket system ever built, the Starship and its Super Heavy rocket booster. The company currently makes money by launching commercial and government satellites.
SpaceX is among several companies where Mr. Musk is the largest shareholder. Aside from Tesla, where he is CEO, he also is the founder of brain computer startup Neuralink and tunnel-digging venture Boring Co., which is partly owned by SpaceX and on Tuesday is scheduled to reveal a test tunnel.
The fundraising rounds out a volatile year for Mr. Musk. His electric car company, Tesla, experienced production problems earlier this year and was weeks away from financial failure, Mr. Musk has said. The company has since overcome some of those issues and in October reported a record quarterly profit.
Mr. Musk was also accused of securities fraud by the Securities and Exchange Commission after tweeting in August that he was considering taking the auto maker private and had secured funding for such a deal, though none materialized. He settled with the SEC in September, and as part of that deal he relinquished his role as Tesla chairman in November. He remains Tesla’s chief executive.
Mr. Musk also drew criticism from some investors and analysts for appearing to smoke marijuana in a live online interview in September. His erratic behavior hasn’t seemed to shake the confidence of some private market investors.
SpaceX investors are optimistic about the potential of Starlink, according to a person familiar with their thinking. SpaceX projects the constellation could balloon to more than 11,000 satellites. The largest current telecommunications constellation has 65 satellites.
However, as at Tesla, Mr. Musk has a history of missing projections at SpaceX. In early 2016 SpaceX projected that it would launch 44 rockets this year, according to internal documents previously reported by The Wall Street Journal. A scheduled launch on Tuesday would be the company’s 21st, and last, this year.
Starlink is also behind the schedule laid out by SpaceX in other internal documents from fall 2015. Back then, SpaceX projected it would have 400 satellites in orbit by the end of this year. SpaceX has launched two prototype satellites, and company officials have said the first batch of operational satellites is slated to blast into orbit as soon as next year.
In 2015, SpaceX projected the internet business would require $3.5 billion of investment capital to launch the first 800 satellites and hire approximately 1,200 employees, among other costs. It projected the business would generate more than $30 billion in revenue by 2025, dwarfing its core rocket business revenue of around $5 billion.
SpaceX ultimately could need more than $10 billion in capital to reach its projected 11,000 satellite constellation, according to some industry estimates.
The company’s rocket business has been growing steadily. It has executed 38 consecutive successful launches since a launchpad explosion in September 2016. Meantime it became the first company to return rocket boosters to earth safely and then routinely re-use them to launch subsequent payloads.
Development of the mammoth rocket and associated hardware remains an open question. Reasons range from changing designs to SpaceX’s being shutout earlier this year from a U.S. Air Force competition that awarded more than $2 billion in contracts to three other rocket makers to develop various smaller boosters.
SpaceX’s existing business faces headwinds. It expects to see declines in launches of its workhorse Falcon 9 rocket for 2019 and perhaps 2020. Global demand for launching commercial satellites, its core business, is stagnant, with some satellite manufacturers and customers looking to permanently exit the market segment.
In the U.S. government arena, SpaceX is just beginning to see its Pentagon and NASA business ramp up. But it will likely take several years to gain substantial revenue from the deals.
Sen Warren calling for probe of generic drug industry related to potential price fixing
Elizabeth Warren has a new way to lower drug prices: have the government make medicines
WASHINGTON — A new bill from Sen. Elizabeth Warren (D-Mass.) proposes a novel solution to the problem of high drug prices: bringing the U.S. government into the drug manufacturing business.
Warren plans to introduce a new bill, the Affordable Drug Manufacturing Act, Tuesday with Rep. Jan Schakowsky (D-Ill.) that would mandate the creation of an Office of Drug Manufacturing, which would be tasked with ensuring generic drugs are available to consumers at accessible prices. Among the potential tools at the office’s disposal: making the drugs itself.
Early premarket gappersGapping up: NAV +19.5%, PBYI +11.5%, ACHN +10%, SGH +6.4%, ORCL +5%, BA +2.3%, SHOP +1.8%, MDCO +1.7%, AMZN +1.6%, CRM +1.6%, CBS +1.5%, NVDA +1.5%, XRX +1.5%, OKTA +0.9%, JNJ +0.6%Gapping down: WPG -5.5%, OPRX -2.5%, PM -1.7%