#279
Getting Hot in Here
Climate change is a very, very expensive problem. Recently published IPCC research suggests that a 1.5 degree Celsius increase in temperature would cost the world $54 trillion in net-present-value damages, or 10% of the world’s $500 trillion in wealth!
Some large asset managers (e.g. Amundi and Blackrock) are urging companies to better report climate risk, going so far as to divest from some companies deemed responsible for climate change. Moreover, Bank of England governor Mark Carney has repeatedly warned that climate risks are not priced into assets appropriately, and that investors may be left holding the bag.
Moreover, insurance and reinsurance companies (such as Swiss Re and Munich re) are increasingly pulling back from insuring these companies – e.g. reducing or pulling coverage from thermal coal companies. Germany’s Allianz said in May that it would no longer insure single coal-fired power plants and coal mines, and that it would phase-out all coal risks by 2040.
While these financial services firms are starting to do their part, emerging markets are unfortunately most at risk from climate change. Insurance premiums as a percentage of GDP are twice as high in developed nations. There is a $160b gap between the annual cost of disasters in emerging countries and the amount covered by insurance.
So while the climate forecasts will change over time, it may be our wallets (as well as the planet) that start feeling the heat…
Portfolio News
MoneyLion announces America’s most powerful and rewarding financial membership - By adding the Financial Heartbeat to its existing suite of premium banking products, MoneyLion is providing users with freedom from financial stress and the opportunity to better achieve their goals. Read more
Getting Hot in Here
Swiss Re faces $1.1bn hit from natural catastrophes - Reinsurers have laid out the multibillion-dollar cost of the recent spate of storms, wildfires and other natural catastrophes, just days before crucial talks with customers on the price of cover for next year. Read more
AIG expects as much as $1.7bn in catastrophe losses - AIG said losses associated with Hurricane Florence, multiple events in Japan, including Typhoons Jebi and Trami would result in pre-tax losses, net of reinsurance, of between $1.5bn to $1.7bn. Read more
Emerging economies have $160bn insurance gap - There is a $160bn gap between the annual cost of disasters in emerging countries and the amount covered by insurance, according to new research from Lloyd’s and the Centre for Economic and Business Research. Read more
Industry News
Coinbase and Circle launch USDC stablecoin with purported full backing in US Dollars - Are we drowning in stablecoins yet? Coinbase, in conjunction with Circle Pay, has launched its own digital currency called "USDC" that pegged to the US Dollar that is fully audited and 100% collaterally backed. Read more
IBM's new blockchain problem: Maersk-backed shipping effort is struggling - The effort to track cargo through the supply chain has failed to get off the ground as the blockchain participants (carriers) have been skeptical about the level of centralization, governance structure, and uneven economics. Read more
Anybody want Bitcoin Futures? Anybody? - The contracts that were seen as a step toward bringing crypto to Wall Street still remain a tiny market 10 months after they launched with the CBOE and CME combined trading only about ~9k contracts a day in Q3 2018. Read more
Banking services coming to 7-Eleven stores in South East Asia - 7-Eleven outlets across Asia have begun offering banking services. In Thailand, a pilot program starting October 31 will enable 20m customers of Government Savings Bank to deposit and withdraw funds at more than 10k convenient stores across the country. Read more
BBVA unveils account aggregation service for businesses - BBVA is launching a real-time account aggregation service for Spanish businesses, enabling them to control all their domestic accounts, credit accounts and cards from a single dashboard. Read more
Kenya moves to regulate fintech-fueled lending craze - Kenya's early adoption of mobile money has enabled a proliferation of lenders to use the same technology to extend credit to the banked and unbanked, saddling borrowers with high interest rates and leaving regulators scrambling to keep up. Read more
Wary of crypto, UK Government blocks royal mint's digital gold - Britain's Royal Mint has frozen plans to launch a digital gold token after a partnership with U.S. exchange group CME failed and the government vetoed a plan to have the tokens trade on a cryptocurrency exchange. Read more
Coinbase snags license to operate as a qualified custodian - Coinbase Custody Trust Company, operating as a separate standalone entity to Coinbase Inc, has received the necessary approval from the New York Department of Financial Services "NYDFS" to operate as a qualified custodian. Coinbase joins the the ranks of Gemini, Paxos, and BitGo in securing the designation. Read more
Select Financings
Algorand - Boston based blockchain and cryptocurrency built for business has raised $62m in equity investment by investors that included Union Square Ventures. Read more
Alpaca - San Mateo based API for investment automation raised a $3m Series Seed led by Global Brain, Archetype, and others. Read more
DataRobot - Boston based machine-learning-as-a-service platform has raised a $100m Series D led by Meritech and Sapphire Ventures. Read more
Ethic - New York based sustainable investing firm has raised $6.8m led by ThirdStream Partners with participation from Nyca Partners, Kapor Capital, and the Urban Innovation Fund. Read more
Hummingbird - San Francisco based platform for anti-money laundering has raised a $3m Series Seed led by Homebrew.
Tala - Los Angeles based mobile lender for emerging markets has received a strategic investment from Paypal. Read more
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