Total economic losses caused by natural disasters hit an estimated $72 billion in the first half of 2022, fuelled by storms and floods, Swiss reinsurance giant Swiss Re estimated Tuesday.
Though the figure is lower than the $91 billion estimate for the first six months of 2021, it is close to the 10-year average of $74 billion, and the weight is shifting towards weather-induced catastrophes.
“The effects of climate change are evident in increasingly extreme weather events, such as the unprecedented floods in Australia and South Africa,” said Martin Bertogg, Swiss Re’s head of catastrophe perils.
The Zurich-based group, which acts as an insurer for insurers, said the losses were also propelled by winter storms in Europe as well as heavy thunderstorms on the continent and in the United States.
So-called secondary natural disasters like floods and storms — as opposed to major disasters such as earthquakes — are happening more frequently, the reinsurer said.
“This confirms the trend we have observed over the last five years: that secondary perils are driving insured losses in every corner of the world,” Bertogg said.
“Unlike hurricanes or earthquakes, these perils are ubiquitous and exacerbated by rapid urbanisation in particularly vulnerable areas,” he said.
“Given the scale of the devastation across the globe, secondary perils require the same disciplined risk assessment as primary perils such as hurricanes.”
Swiss Re said floods in India, China and Bangladesh confirm the growing loss potential from flooding in urban areas.
Man-made catastrophes such as industrial accidents added on a further $3 billion of economic losses to the $72 billion from natural disasters, taking the total to $75 billion — which is down on the $95 billion total for the first half of 2021.
– Insured losses at $38 bn –
Total insured losses stood at $38 billion: $3 billion worth of man-made disasters and $35 billion worth of natural catastrophes — up 22 percent on the 10-year average, said the Swiss reinsurer, warning of the effects of climate change.
February’s storms in Europe cost insurers $3.5 billion, according to Swiss Re estimates.
Australia’s floods in February and March set a new record for insured flood losses in the country at so far close to $3.5 billion — one of the costliest natural catastrophes ever in the country.
Severe weather and hailstorms in France in the first six months of the year have so far caused an estimated four billion euros ($4.1 billion) of insured market losses.
The Swiss group also mentioned the summer heatwaves in Europe, which resulted in fires and drought-related damage, without providing estimates at this stage.
A warming climate is likely to exacerbate droughts and thereby the likelihood of wildfires, causing greater damage where urban sprawl grows into the countryside, Swiss Re said.
“Climate change is one of the biggest risks our society and the global economy is facing,” said the group’s chief economist Jerome Jean Haegeli.
“With 75 percent of all natural catastrophes still uninsured, we see large protection gaps globally exacerbated by today’s cost-of-living crisis.”
Uber posts quarterly loss, but revenue exceeds expectations
Uber on Tuesday reported better-than-expected revenue in the second quarter, fueled by strong demand for the San Francisco-based company’s ride-hailing and food delivery services.
Revenue more than doubled to $8.1 billion in the three months through June — a 105 percent increase. Though it still posted a net loss of $2.6 billion, investors reacted positively: shares shot up more than 12 percent, to $27.58, in pre-market trading.
The company posted $1.8 billion in revenue from its freight operations. It also said the boost in revenue was partially explained by a change in how it accounts for its rides business in Britain.
Uber notched gains in monthly active platform consumers, gross bookings and trips compared with a year ago, reflecting higher demand but also a higher number of drivers for its signature ride service and food delivery operations.
Uber CEO Dara Khosrowshahi said both consumers and earners were at “all-time highs.”
“Last quarter I challenged our team to meet our profitability commitments even faster than planned — and they delivered,” Khosrowshahi said in a statement.
Uber primarily attributed its loss to the falling value of its investments in financially strapped companies such as Singapore’s VTC Grab, US self-driving vehicle start-up Aurora and Indian food delivery service Zomato.
US manufacturing growth slows further in July: survey
The US manufacturing sector continued to grow in July, but the pace was impacted by dimming demand while price increases have slowed dramatically, according to an industry survey released Monday.
And amid a tight American job market, hiring slowed for the third straight month, but firms are reporting less trouble filling open positions and no signs of layoffs, the Institute for Supply Management’s latest report showed.
But firms continue to have trouble filling orders due to ongoing problems getting materials.
ISM’s manufacturing index dipped to 52.8 percent, just two-tenths below the prior month, but the lowest level since June 2020 during the pandemic downturn.
However, that level was still above the 50-percent threshold indicating expansion for the 26th consecutive month.
“The U.S. manufacturing sector continues expanding — though slightly less so in July — as new order rates continue to contract, supplier deliveries improve and prices soften to acceptable levels,” ISM manufacturing survey chair Timothy Fiore said.
The new orders index fell 1.2 points, to 48 percent, signaling a slowdown, and production fell by slightly more but continues to grow.
“Lead times remain at elevated levels, and fundamental raw material prices continue to persuade buyers to remain on the sidelines,” Fiore said
The prices index fell a whopping 18.5 points — the fourth biggest decline on record — to 60 percent, with a much higher share of firms reporting falling prices, the survey showed. The index has been above 60 percent for nearly two years.
Covid-19 lockdowns in China and Russia’s war in Ukraine have been exacerbating shortages experienced, fueling the global inflation surge, especially for energy, and prompted the Federal Reserve to raise borrowing costs aggressively.
Survey respondents noted ongoing supply issues and the impact of rising prices, and several expressed concern about the future
“Our markets are still holding up; however, I believe a slowdown is coming,” one said. “I believe the general market is in the beginnings of a recession.”
Oren Klachkin of Oxford Economics said challenges are mounting for firms.
“Manufacturers will face many of the same challenges in the second half of 2022 that they did in H1,” he said in an analysis.
“The confluence of hot inflation, higher interest rates, ongoing supply chain issues and normalizing spending patterns will make demand more fragile.”
Crypto clients beg for their cash back after lender’s crash
An Irishman at risk of losing his farm. An American having suicidal thoughts. An 84-year-old widow’s lost life savings: People caught in the meltdown of crypto lender Celsius are pleading for their money back.
Hundreds of letters have poured in to the judge overseeing the firm’s multi-billion-dollar bankruptcy and they are heavy with anger, shame, desperation and, frequently, regret.
“I knew there were risks,” said a client whose letter was unsigned. “It seemed a worthwhile risk.”
Celsius and its CEO Alex Mashinsky had billed the platform as a safe place for people to deposit their crypto currencies in exchange for high interest, while the firm lent out and invested those deposits.
But as the value of highly volatile crypto currencies plummeted –- bitcoin alone has shed over 60 percent since November -– the firm faced mounting troubles until it froze withdrawals in mid-June.
The company owed $4.7 billion to its users, according to a court filing earlier this month, and the endgame is unclear.
The letters –- posted to a public online court docket –- come from around the world and recount tragic results of users’ money being frozen.
“From that hard-working single mom in Texas struggling with past-due bills, to the teacher in India with all his hard-earned money deposited in Celsius –- I believe I can speak for most of us when I say I feel betrayed, ashamed, depressed, angry,” wrote one client who signed their letter E.L.
While the letters vary in their level of sophistication about the crypto world -– from self-confessed novices to all-in evangelists –- and the monetary impacts range from a few hundred dollars to seven-figure sums, nearly all agree on one thing.
“I have been a loyal Celsius customer since 2019 and feel completely lied to Alex Mashinsky,” wrote a client who AFP is not identifying to protect his privacy. “Alex would talk about how Celsius is safer than banks.”
Many of the letters point to the CEO’s AMA (Ask Mashinsky Anything) online chats as key to their confidence in him and the platform, which presented itself as stable until days before it froze users’ funds.
– Repeated assurances before fall –
“Celsius has one of the best risk management teams in the world. Our security team and infrastructure is second to none,” the firm wrote on June 7.
“We have made it through crypto downturns before (this is our fourth!). Celsius is prepared,” the firm wrote.
The message also said the company had the reserves to pay its obligations, and withdrawals were being processed as normal.
One client, who reported having $32,000 in crypto locked up at Celsius, noted the impact.
“Right up until the end, the retail investor received assurance,” the client wrote to the judge.
But that changed quickly, and on June 12 Celsius announced the freeze: “We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.”
Some clients got the news in a message from the company.
“By the time I finished the e-mail, I had collapsed onto the floor with my head in my hands and I fought back tears,” wrote one man who had about $50,000 in assets with Celsius.
The clients who said they were hardest hit, including a man who said he placed $525,000 he got from a government loan on Celsius, disclosed they had considered killing themselves.
Others reported heavy stress, lack of sleep and feelings of deep shame for putting their retirement savings or their children’s college money into a platform that was far riskier than they knew.
“As a private unregulated company, Celsius does not come under any requirement for disclosure,” is how the Washington Post summarized the situation.
Celsius did not reply to a request for comment on the clients’ letters.
For people like one 84-year-old woman, who only had her roughly $30,000 in crypto savings on Celsius for a month, their hope lies in the bankruptcy proceedings.
“It’s just not unusual for people to come out of something like this with zero,” said Don Coker, an expert witness on banking and finance.
“Obviously I feel sorry for anyone who loses an investment like this, but it is just something where they need to be aware of the risks,” he said.
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