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The first quarter Small Business Index, which measures small business owner confidence, is 62.3—similar to last quarter’s score of 61.3—reflecting a stable business climate. More small businesses see an improving economy, which drove the headline score up one point.

One in three (32%) small business owners now say the U.S. economy is in good health, up seven percentage points from last quarter. Roughly two in five (38%) say their local economy is in good health, up eight percentage points from the end of 2023.

The first quarter survey sponsored by MetLife and the U.S. Chamber of Commerce also found that small businesses see cybersecurity and supply chains as their biggest threats.

“Small businesses’ perceptions of the economy are drifting upward, with businesses reporting being comfortable with their cash flow and the health of their business,” said Tom Sullivan, vice president of Small Business Policy at the U.S. Chamber of Commerce. “While many business owners have continued to struggle with high prices and rising wages, recent jobs reports are positive. While headwinds remain, confidence is ticking upward and small businesses are more resilient and prepared for unforeseen challenges.”

Top Threats

This quarter’s survey asked small businesses about their concern for future threats and their crisis planning in response to those threats. Small businesses say they are most concerned about:

• Cybersecurity – 60%
• Supply chain breakdowns – 58%
• Another pandemic occurring in the future – 54%
• Inclement weather – 45%
• Theft – 42%
• Natural disasters – 39%
• Act of terrorism – 37%

Overall, most (71%) small businesses maintain they are “adequately prepared” for future threats. Most (80%) also say they have a clear idea of how to change their business if it starts to struggle.

Though these topline numbers indicate most small businesses feel prepared to handle what comes their way, across the board, most say they are only somewhat prepared to deal with them, rather than very prepared. For example, 23% say they are very prepared for cybersecurity threats, versus 50% who feel somewhat prepared. The gap is even larger in preparedness for a supply chain breakdown (14% very prepared, 47% somewhat prepared).

To address potential threats, small businesses say they are contributing to rainy-day funds (62%), installing surveillance precautions (56%), training staff on cybersecurity measures (48%), establishing formalized plans for future threats (43%), taking out insurance in case of natural disaster (38%), and building out existing supply chains (35%).

Muted Perception

According to the survey, most small businesses are reporting consistent, high satisfaction with the state of their cash flow and business health. About two-thirds say the overall health of their business is good (65%) and that they are comfortable with their current cash flow (67%).

According to the survey analysis, overall perception of the economy remains “muted” with nearly half of small businesses continuing to feel the economy is in poor health. They remain concerned about inflation with more half (52%) citing inflation as a top challenge. In addition, concern for revenue rose seven percentage points this quarter with 29% saying revenue is a top challenge, returning to a level of concern last recorded in late 2021.

The survey was conducted January 26 – February 12, 2024. The survey has a credibility interval of plus or minus 4.4 percentage points for all respondents.

Topics
Cyber
Commercial Lines
Business Insurance

Beat Capital Partners, a London-based venture capital investor that focuses on the insurance industry, announced it is planning to launch a specialty and tech-enabled credit non-payment insurance underwriter.

Called “Convergence,” the business is expected to underwrite through a Lloyd’s consortium, led by Beat Syndicate 4242, with Stephen Pike as CEO and founder. Its initial focus will be on Europe and North America.

The date of the launch hasn’t yet been announced.

Convergence will step into the market to meet the growing and largely unaddressed need for portfolio solutions among banks and global financial institutions, specifically targeting the insurance of credit risk portfolios, Beat Capital said.

Convergence plans to leverage a combination of technology and data analytics, powered by a proprietary algorithmic modeling platform developed in partnership with University College London (UCL). This platform enables Convergence to swiftly integrate, enhance, and utilize the extensive data provided by financial institutions. Through this innovative and tech-driven platform, it will offer unparalleled efficiency and precision in servicing a broad spectrum of opportunities in economic risk management.

With 20 years of credit experience, Pike previously held the role of global head of credit and political risk (CPR) at Canopius, having joined the CPR team in 2017. Pike went on to evolve the global reinsurer’s proposition from single situations through the creation of a portfolio credit team.

Prior to that he was co-head of trade finance at ED&F MAN Capital Markets where he established the business’ global trade finance business. He started his career at Merrill Lynch and went on to be a portfolio analyst at Cyrus Capital, a credit special situations fund.

Pike will be joined by Jeremy Hatchuel, co-founder and partner. He brings 10 years of quantitative expertise at the intersection of the capital markets and insurance, starting his career as an ILS structurer at Aon Securities and later joining the Canopius CPR team to lead its portfolio solutions function. Hatchuel has an Master of Science degree in Cognitive Science and conducted research in computational neuroscience at UCL.

“Convergence will be launched to take advantage of the many opportunities available in the CPR market. It is a complex sector and the team has a wealth of experience,” Pike said. “We will be data driven and have developed a proprietary model with UCL which will provide scalable solutions for our clients. Our purpose-built technology, industry knowledge and understanding of individual clients will give us a market leading position.”

About Beat Capital Partners

Beat Capital Partners is a long duration venture capital investor exclusively focused on the insurance industry. Beat provides underwriting teams with equity in their own business, the potential to access to highly rated Lloyd’s (AA-) and other partner paper, a full-service back office, start-up financing, expedient set up and launch plus partnership with Beat’s team and proven record of success. Beat operates 11 underwriting franchises that write US$700 million in gross written premiums in diverse lines of business in the UK, Bermuda and the U.S. Beat also helps manage Syndicates 4242 / 1416 in Lloyd’s and Cadenza Re, a Beat-dedicated reinsurer, in Bermuda.

Source: Beat Capital Partners

Topics
New Markets

Mark Zuckerberg won his bid to avoid personal liability in about two dozen lawsuits accusing Meta Platforms Inc. and other social media companies of addicting children to their products.

US District Judge Yvonne Gonzalez Rogers, who is overseeing the cases, sided with the Meta chief executive officer in a ruling issued Monday. The decision dismisses Zuckerberg as an individual defendant without affecting claims against Meta as a company.

Lawsuits filed on behalf of young people have alleged that Zuckerberg was repeatedly warned that Instagram and Facebook weren’t safe for children but ignored the findings and chose not to share them publicly.

Rogers ruled that Zuckerberg was not required to disclose safety information absent a “special relationship” with the users of Meta’s products, according to the order.

The judge also said Zuckerberg couldn’t be held liable just because he’s the public face of Meta. Finding otherwise would create “a duty to disclose for any individual recognizable to the public,” Rogers wrote in the ruling. “The court will not countenance such a novel approach here.”

Rogers said the Meta users and family members who sued can amend and refile their complaints. At a hearing in February, the judge appeared sympathetic to plaintiffs’ arguments that Zuckerberg could be held liable for personally concealing information as a corporate officer at Meta.

A Meta representative and an attorney for the plaintiffs didn’t immediately respond to requests for comment.

The cases naming Zuckerberg are a small subset of a collection of more than 1,000 suits in state and federal courts by families and public school districts against Meta along with Alphabet Inc.’s Google, ByteDance Ltd.’s TikTok, and Snap Inc., owner of the Snapchat platform.

Rogers allowed some claims to proceed against the companies while dismissing others. The companies have denied wrongdoing, saying they have taken steps to keep young users safe on the platforms.

The case is In Re Social Media Adolescent Addiction/Personal Injury Products Liability Litigation, 22-md-03047, US District Court, Northern District of California (Oakland).

Photo: Mark Zuckerberg, chief executive officer of Meta Platforms Inc., during a Senate Judiciary Committee hearing in Washington, DC, US, on Wednesday, Jan. 31, 2024. Congress has increasingly scrutinized social media platforms as growing evidence suggests that excessive use and the proliferation of harmful content may be damaging young people’s mental health. Photographer: Kent Nishimura/Bloomberg

Copyright 2024 Bloomberg.

Topics
Lawsuits

Leftover blazes from last year’s record wildfire season in Canada are threatening to knock out almost 3% of the country’s natural gas production.

A total of 50 so-called zombie fires still smoldering beneath layers of snow are located near oil and gas wells and other production facilities, according to government data analyzed by Bloomberg News. Those sites yield natural gas equivalent to about 80,000 barrels a day of oil in Canada’s energy heartland of Alberta alone, in addition to almost 14,000 barrels a day of crude.

Companies most at risk of disruptions include Tourmaline Oil Corp., the country’s biggest gas driller, as well as oil-sands giant Cenovus Energy Inc. and Paramount Resources Ltd. Smaller explorers could also be affected, including closely held Westbrick Energy Ltd.

Fires From 2023, Smoldering Under Snow, Reveal Canada’s Dangerous New Reality

The residual blazes underscore how Canada’s energy industry — underpinned by an oil-sands sector that produces some of the world’s dirtiest crudes — is increasingly imperiled by climate change. Usually hot, dry weather contributed to the country’s worst-ever wildfire season last year, darkening skies over New York and other US cities. And with over 65% of Canada abnormally parched or in drought at the end of March, the nation is bracing for another smoke-filled summer.

Canada could be facing another catastrophic fire season this year as dangerously dry conditions combine with higher-than-normal temperatures buoyed by the El Niño weather pattern, according to a government forecast. Alberta declared the start of its its wildfire season this year on Feb. 20, the earliest in recent years. Zombie fires, along with new ones, could flare up as temperatures rise throughout the spring.

The leftover fires burn into organic matter in the earth including into peat, which smolders easily and is difficult to extinguish. The blazes from 2023 aren’t generally as much of a threat as new conflagrations that emerge, but the large number of carryover fires this year is a problem, Alberta Wildfire spokeswoman Josee St-Onge said by phone.

“The advantage is we know them and we have been working on them for a year,” she said, cautioning that the province is entering a period when blazes flare up.

A representative for Cenovus said the company is building on what it learned last year to prepare for wildfires this season, including updating its fire program and completing risk assessments to ensure areas with excess vegetation are identified and mitigated. Spokespeople for Tourmaline and Paramount didn’t immediately respond to requests for comment.

For Westbrick, which shut in as much as 30,000 barrels of oil equivalent last year, the leftover fires are not a reason to be “overly concerned,” Chief Executive Officer Ken McCagherty said by phone. Much of the vegetation that fueled last year’s wildfires has been burned off, he said.

“We’re in a far, far better position this year than last year,” McCagherty said.

Chevron Corp., Canadian Natural Resources Ltd. and Baytex Energy Corp. at times shut production equivalent to about 300,000 barrels of oil a day combined last year as blazes encroached on wells and processing infrastructure, mostly in the western shale oil and gas producing regions along the British Columbia and Alberta border. The fires scorched about 4% of the country’s forests.

That damage was dwarfed by the fire season of 2016, when more than 1 million barrels of daily oil output was shut during a devastating blaze that razed sections of Fort McMurray — the largest city near most producers’ oil-sands operations — and caused about C$3.7 billion in insured losses, making it Canada’s costliest natural disaster.

Top photograph: An oil refinery north of Fort McMurray, Alberta, Canada, in 2016. Photo credit: Darryl Dyck/Bloomberg

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Copyright 2024 Bloomberg.

Topics
Energy
Oil Gas
Canada

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