Less devastating than mega events such as earthquakes and hurricanes, these secondary perils, as they are known in the industry, happen relatively frequently and include hail, drought, wildfire, snow, flash floods and landslides.
Climate change and urban sprawl are driving a jump in secondary perils losses, said Tamara Soyka, Head Cat Perils EMEA at
Insurers and reinsurers, who traditionally focused on predicting big weather events that can cause widespread damage, are increasingly incorporating secondary-peril models.
Swiss Re, for instance, last year started considering pluvial—that is, heavy rainfall, similar to the recent European floods—flood zones when assessing risks.
A storm system over Europe dumped heavy rains in recent weeks, causing heavy floods in Germany, Belgium and parts of the Netherlands and Switzerland. The German Insurance Association on Wednesday said it expects insured losses could hit nearly $6 billion as a result of the flooding in North Rhine-Westphalia and Rhineland-Palatinate. It doesn’t yet have estimates for the damage in Saxony and Bavaria.
This year is expected to be the most damaging for the country since 2002, when insured storm damage totaled about €11 billion, equivalent to $12.98 billion, the association said. While mostly all residential buildings have windstorm and hail coverage, only 46% of homeowners have cover for heavy rain and floods.
Heavy rain, hailstorms and wind in Germany and Switzerland in June have already cost the industry an estimated $4.5 billion, according to analysts at Berenberg.
in a note this week said German insurers “may find it challenging to protect homeowners against climate risk without significant price increases.”
Insurers paid out $81 billion for damages related to natural catastrophes in 2020, according to reinsurance giant Swiss Re, up 50% from 2019 and comfortably topping the $74 billion 10-year average for such losses.
Secondary peril events accounted for more than 70% of the $81 billion in natural catastrophe losses last year, according to the data.
Firms expected to take hits to their earnings from the European floods include Swiss Re,
according to analysts. Spokespeople for Swiss Re, Zurich and Munich Re declined to give estimates of the potential impact.
UBS Group AG analysts project $6 billion worth of losses for the industry, split into $2 billion for primary insurers and $4 billion for reinsurers.
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The prospect of more intense weather has insurers rapidly updating their risk-assessment models and recalculating the price of insurance. Property insurers faced an estimated $18 billion bill for damage to homes and businesses from the long stretch of frigid weather in Texas and numerous other states, the equivalent of a major hurricane, The Wall Street Journal reported earlier this year.
In some cases, the increased frequency of extreme weather events can lead insurers to drop coverage altogether. Some insurers in California chose to not renew insurance policies for homeowners in high-risk areas for wildfires, the Journal reported in 2019. California wildfires the prior two years had killed dozens of people and racked up more than $24 billion in insured losses.
Analysts say the losses from the European flooding will be manageable for the industry. While they may dent quarterly or yearly earnings, they won’t have a seismic effect on their capital. If the coming U.S. hurricane season is a normal one, that will likely crimp earnings further for some.
The Euro Stoxx Insurance index is up 7.6% this year, trailing the broad Euro Stoxx 600 stock-market index, which is up nearly 15%. The insurance index has fallen 6.4% since March 30, which Berenberg analysts attribute to fears of potential dividend cuts due to recent natural catastrophes.
The costs of reinsurance in Asia and the U.S. went up over the past couple of years owing to hurricanes and wildfires, said Berenberg analyst Michael Huttner. But prices in Europe didn’t increase significantly over that period. The floods will likely help catastrophe pricing increase, said Mr. Huttner.
Will Hardcastle, an analyst at UBS, says this year is shaping up to be the fifth consecutive year that natural catastrophe losses will be above reinsurers’ budgeted level.
“The last five years would suggest you’re not getting appropriate pricing for it,” he said. “It’s always difficult to determine whether the trend is short term. Now at this point you have to be thinking it’s more structural” because of climate change, he said.
Lumber prices finally cooled off. Now come the fires.
Forest fires raging in the West are threatening an important swath of the U.S.’s wood supply, pinching output that has been under pressure since the Covid-19 pandemic touched off homebuying and remodeling booms and sent lumber prices soaring.
, one of North America’s largest lumber producers, said that starting Monday it would cut back output at its mills in British Columbia because of hundreds of blazes that have broken out in the Canadian province and challenged its ability to shuttle wood to and from its facilities. The company expects to reduce output at its 10 operating mills there by a total of about 115 million board feet during the quarter.
That is only a sliver of North America’s overall supply. Yet analysts said they expected further curtailments because of fires that are scorching logging forests on both sides of the U.S.-Canadian border. In addition, lumber prices have fallen below the cost of sawing boards in the continent’s most expensive place to process timber.
“The wildfires burning in western Canada are significantly impacting the supply chain and our ability to transport product to market,” said
executive vice president of Canfor’s North American operations.
Traders responded Wednesday by bidding up lumber futures for delivery through January by the daily maximum allowed by exchange rules. September futures rose 7.75% to close at $584 per thousand board feet, a rare up day in the midst of a 66% decline since early May.
Lumber is one of several commodities markets being roiled by extreme weather this summer. The same heat and drought that set the stage for an unusually early and intense fire season in the West have dried up hydroelectric power output and increased air-conditioning demand in the region, which has helped push natural-gas prices to their highest summer levels in seven years.
A lack of rainfall in South American farming regions has left the Paraná River too shallow for fully loaded boats to pass from Argentina’s interior to Atlantic shipping lanes, contributing to high prices for soybeans and corn. Flooding in Germany last week forced the closure of a plant owned by
, a major metal producer and recycler, as copper prices hover around all-time highs.
Aurubis said that one of its two facilities in Stolberg, western Germany, was evacuated without injury to employees. The damage is extensive and production isn’t expected to resume until the fourth quarter at the earliest.
“Delivery to customers and acceptance of incoming deliveries are impossible right now,” the firm said.
The lumber market was just getting back into balance when the fires broke out. North America’s sawmills sent workers home at the start of the lockdown and were unprepared for the building boom that ensued. They have struggled to saw logs fast enough to meet demand from home builders, do-it-yourselfers and restaurants that raced to install outdoor seating areas.
Lumber prices topped out in May at more than four times what is typical for two-by-fours, which helped reduce demand, particularly from the more price-sensitive DIY market that buys wood from retailers such as
Mark Wilde, an analyst with BMO Capital Markets, said he expects more mills to announce reduced hours and shifts in the coming weeks
“Pricing windfalls like that of the last 12 months are once in a generation,” he said. “It would be crazy to simply return all that cash to the market by overproducing during a weak market.”
The wood-pricing service Random Lengths said in its midweek report that some Western mills have recently unloaded two-by-fours of spruce, pine and fir for below $400 per thousand board feet. Forest-product executives said that mills operating in British Columbia, where the provincial government metes out log supply, usually need more like $700 to be profitable these days.
Such a high break-even price, along with the threat of fires, outbreaks of wood-boring beetles and distance to the Sunbelt’s mushrooming housing markets, has relegated what was once the continent’s top lumber-producing region to the status of swing producer. That means that the region’s mills—much like U.S. shale producers in the oil market—are likely to be the first to curtail production when lumber prices fall and are then counted on to increase output when supplies are stretched and prices rebound.
Canfor and its rivals have responded by shifting their focus to the U.S. South, where a glut of pine trees has pushed log prices to their lowest levels in decades despite strong demand for finished lumber. They have been quick to invest profits from the recent price surge into the South, which has overtaken Canada as the continent’s top lumber-producing region.
—Joe Wallace contributed to this article.
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Global coffee prices are climbing and threatening to drive up costs at the breakfast table as the world’s biggest coffee producer, Brazil, faces one of its worst droughts in almost a century.
Prices for arabica coffee beans—the main variety produced in Brazil—hit their highest level since 2016 last month. New York-traded arabica futures have risen over 18% in the past three months to $1.51 a pound. London-traded robusta—a stronger-tasting variety favored in instant coffee—has risen over 30% in the past three months, to $1,749 a metric ton, a two-year high.
Brazil’s farmers are girding for one of their biggest slumps in output in almost 20 years after months of drought left plants to wither. Brazil’s arabica crop cycles between one stronger year followed by a weaker year. Following a record harvest in 2020, 2021 was set to be a weaker year, but the drop is more severe than expected.
“I’ve been growing coffee more than 50 years, and I’ve never seen as bad a drought as the one last year and this year,” said Christina Valle, a third-generation coffee grower in Minas Gerais, Brazil’s biggest coffee-growing state. “I normally take three months to harvest my coffee; this year it took me a month,” she said.
Brazil’s total coffee harvest this year is expected to drop by the biggest year-over-year amount since 2003, according to the U.S. Department of Agriculture. Its arabica crop is forecast to be almost 15 million 132-pound bags smaller than in 2020.
Others are guarding for an even larger slump. Dutch agricultural bank Rabobank expects the harvest to be 17 million bags smaller, while commodities brokerage ED&F Man, whose Volcafe arm is one of the world’s largest coffee traders, expects a decline of more than 23 million bags.
“A drop that severe is unprecedented,” said Kona Haque, head of research at ED&F Man.
The pandemic shook up how consumers drink coffee. Demand for at-home machines and instant brews rose, compensating somewhat for closed coffee shops. The price rally comes just as Western nations are emerging from lockdowns and cafes are welcoming back customers starved of out-of-home coffee culture.
Global coffee consumption is expected to exceed production this year for the first time since 2017, according to the USDA. The department expects 165 million bags of beans to be consumed in 2021. That is 1.8 million bags more than last year. Meanwhile, global coffee production is expected to decline to 164.8 million bags.
There are other factors behind the price rally. Two other major producing nations, Colombia and Vietnam, have had much better harvests than Brazil but are struggling with a different issue: Port delays have left beans sitting idle on the dock.
Exports of Colombian coffee, particularly desired by baristas for its milder flavor, fell as antigovernment protesters blocked highways and ports. A shortage of shipping containers and rocketing freight costs hit Vietnamese farmers, who produce more than a third of the world’s supply of robusta.
“The whole supply chain suffered not only a significant increase in costs but also massive delays,” said Carlos Mera, head of agri-commodities market research at Rabobank. Unlike other commodities, coffee can only be moved around the globe in containers, he said.
Investors are also playing a role, betting that commodities will benefit from rising prices generally. Some investors bid up the price of coffee by putting money in commodity index funds that track broad baskets of commodities from industrial metals to coffee and cocoa, said Mr. Mera.
“There is a lot of money right now that is very keen on holding commodities as real assets, as hedges against inflation,” he said.
Coffee roasters have so far held off from passing higher prices on to consumers, said Ms. Haque. The higher costs of beans coupled with higher freight costs could mean roasters start charging consumers more if they think post-lockdown demand will be strong, she said.
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In Brazil, farmers say their stockpiles left over from last year’s bumper crop are dwindling and they are concerned they could run out before next year’s harvest begins.
“We’re a bit worried about having enough to sell next year,” said José Marcos Magalhães, president of the Minasul coffee cooperative. The cooperative is urging members to deliver whatever coffee they have to the cooperative so that it can keep meeting its orders, he said.
Coffee lovers could still find a reprieve. Brazil’s spring rains, which typically fall in September, will be crucial for determining whether damaged coffee plants can recover and produce enough beans during next year’s harvest, said Steve Pollard, a coffee analyst at brokerage Marex.
The alternative could see prices rise even higher, he said. Coffee plants take about 2½ years to develop, and farmers can’t respond quickly by simply planting more crops. “If there is a significant deficit then prices could skyrocket,” he said.
It isn’t even close to the peak of Texas’s sizzling summer season and already the state’s power grid has given out two warnings of tight conditions after a higher-than-usual volume of plants went offline. Wear and tear from the February winter storm is one possible explanation; market manipulation is another. They aren’t mutually exclusive.
Warm weather and low wind output played a role, but what was surprising about the alerts—one in April, the other in June—was the number of power plants that were offline at the same time. On June 14, the Electricity Reliability Council of Texas, the state’s grid operator, said some 11 gigawatts of generation (roughly 15% of that day’s peak load forecast and enough to power 2.2 million homes in the summer) was on forced outage for repairs. In April, Ercot had said roughly 33 GW of generation was out of service for maintenance. Of course, that isn’t entirely surprising after the February disaster that strained the entire system and left millions without power.
The exact causes of the outages aren’t all accounted for. Texas regulators on Wednesday ordered Ercot to release that kind of information within three days instead of the usual 60 days for any outages that occur this summer. Ercot is expected to release information on the June outages this week. While that will offer some color, it likely won’t be the full story, especially given that the information will be based on whatever the power plants have told Ercot. The independent market monitor, Potomac Economics, will investigate whether any market manipulation took place in those two events.
The tight supply conditions are a reminder of two separate but potentially compounding risks of a grid that offers large carrots in times of market tightness (up to $9,000 a megawatt-hour) but barely any sticks for being unavailable. Such a market gives generators little reason to maintain their power plants beyond the bare minimum, increasing the chances of unplanned outages. Secondly, in such a market, manipulation—withholding power from certain plants to reap outsize profits from others—is tempting. The combination seems to make for a potentially reinforcing spiral of risks, especially given the worn-down physical and financial state of power plants in Texas after the February storm.
The most obvious culprit for the outages is the storm itself, which left the grid severely strained. Beth Garza, former director of Ercot’s independent market monitor, pointed out that the June outages occurred on a Monday and that it isn’t uncommon for power plants to plan to go offline over the weekend for a quick fix only to have that outage extended because repairs took longer than expected.
Another possibility that can’t be ruled out is market manipulation. The electricity market fiasco in February led to high rewards for certain market participants and painful losses for others. The former group’s appetite for reward might have been piqued by the scarcity event, while for the latter, the rewards of spiking profits could start to overwhelmingly outweigh any costs of being caught out for manipulation.
Selling electricity in Texas isn’t terribly rewarding. Based on an analysis of annual reports that Ercot’s independent market monitor publishes every year, Ed Hirs, an energy economist who teaches at University of Houston, found that in eight out of the last 10 years revenues received by generators haven’t been enough to cover their costs.
Part of the problem is that market manipulation rules are rather lax. For example, Texas has a “small fish” rule that means companies controlling less than 5% of the system’s total capacity aren’t considered to have market power. Yet the independent market monitor has pointed out in previous reports that there were times when small fish would have been pivotal to the grid and able to increase the market’s power price.
A more far-fetched but nonzero possibility is that the winter’s strain provides easy cover for any power plant owners who need an explanation for withholding power from the market.
Ironically, Texas’s attempt to fix the winter problem could end up exacerbating these very risks. In June, the state passed a mandate ordering the public utility commission to establish rules for the weatherization of power plants, giving the commission power to levy fines as large as $1 million for those that don’t comply. Such measures would probably require more downtime among existing power plants and create more costs for them. And more financial strain could, theoretically, cause more market-manipulative behavior from power plants unable to recoup enough of their costs through normal course of business.
Moreover, Mr. Hirs notes that it is “entirely possible that some companies will just withdraw from the grid because they haven’t been covering their costs to date,” adding that some participants were running power plants that were already “essentially broken.”
On the other hand, there is already a lot of scrutiny following the cold snap in February. The Federal Energy Regulatory Commission opened an examination to determine whether any market manipulation was involved in both wholesale natural gas and electricity markets during the power shortage earlier this year. And, because the market was already under tight conditions for long spells in February, the maximum price that power plants can reap has come down to $2,000 per megawatt-hour, down from $9,000. Still, that cap is still well above the roughly $22 per MWh day-ahead prices seen for the market overall in 2020.
Scrutiny or not, power producers might be messing with Texas.
The failure of the Keystone XL project demonstrated the challenges of building new pipelines in the U.S. and Canada amid galvanized environmental groups and delivered a blow to oil-and-gas companies that now must rely on aging infrastructure.
abandoned Wednesday, and other pipelines for more than a decade, hoping to choke off fossil-fuel usage by making it harder to transport. The success with Keystone XL already has emboldened environmentalists, who in recent weeks have turned their attention to other pipelines in the U.S. and Canada.
But the U.S. and Canada still rely on pipelines to transport fossil fuels that underpin commerce, transportation and heating and cooling. As pipelines become increasingly difficult to build, the countries will become more dependent on older infrastructure that is vulnerable to disruptions. The shutdown of the Colonial Pipeline last month after it was attacked by hackers highlights the potential impact caused by unexpected disruptions to the current network.
“Clearly, we’re relying on the infrastructure we currently have. The question becomes, as we think about filling future demand, and we need to repair or replace old infrastructure, how are we going to handle it?” said
Amy Myers Jaffe,
a research professor at Tufts University’s Fletcher School.
Global oil demand is projected to peak in coming years, which could mean projects like Keystone could eventually outlive their utility, Ms. Jaffe said. “We’re not building for the 1950s, we’re building for the 2030s.”
In the past two years, at least four multibillion-dollar pipeline projects that drew protests have been canceled or delayed after encountering regulatory and political roadblocks, and environmental groups are looking to capitalize on the momentum. Some producers also have resorted to transporting oil by rail, a more expensive and potentially more dangerous alternative.
evacuated 44 workers in Minnesota, working on replacing a crude-oil pipeline there, after a group of protesters descended on a pump station in the middle of the state. Native American tribes and environmental groups continue to challenge the Dakota Access Pipeline in a long-running effort that has entangled the company in court for years.
The death of Keystone XL is the latest setback for the oil-and-gas industry. In May, a Dutch court found that
board, a historic defeat for the oil giant that may force it to alter its fossil-fuel-focused strategy.
The trio of defeats demonstrates how dramatically the landscape is shifting for oil-and-gas companies as campaigns directed by environmentalists have spread to investors, lenders, politicians and regulators who are increasingly calling for a transition to cleaner forms of energy.
Cos. dropped its Constitution natural gas pipeline after failing to gain a water permit from New York state.
who made canceling Keystone XL a central plank of his election campaign, has remained mostly mum about other pipeline projects under construction.
Environmental and indigenous groups have sued to stop construction on Enbridge’s project to replace its Line 3 crude-oil pipeline with a larger conduit that will carry oil from Alberta’s oil sands to Superior, Wis., arguing that the U.S. Army Corps of Engineers failed to consider the environmental impacts of the pipeline when it granted a water-quality permit.
The company already has replaced sections in other states but has encountered obstacles in Minnesota, where it hopes to complete construction by the end of the year. After Enbridge evacuated workers Monday, the Hubbard County Sheriff’s department arrested 179 people for damaging equipment and dumping garbage on the site.
“The project is already providing significant economic benefits for counties, small businesses, Native American communities, and union members—including creating 5,200 family-sustaining construction jobs, and millions of dollars in local spending and tax revenues,” said the company in a statement on Thursday.
The Minnesota Court of Appeals is expected to make a ruling on a case that challenged the state’s Public Utilities Commission’s approval of the project.
Michigan state officials in November revoked a permit that allowed another Enbridge pipeline to run along the bottom of the Straits of Mackinac, citing the risk of damage to the region’s ecosystem. Gov.
gave Enbridge a May 12 deadline to shut down the pipeline, but the company hasn’t complied, claiming the governor lacks the authority to do so.
The 645-mile conduit carries more than half a million barrels of oil and natural-gas liquids each day from Superior to refineries in Michigan, Ohio, Pennsylvania, Ontario and Quebec.
“Does the Keystone XL cancellation embolden fights against other pipelines? That’s a resounding yes,” said
Great Lakes region executive director for the National Wildlife Federation, which opposes the operation of Enbridge’s pipeline through Michigan.
“We’re very pleased,” said
executive director of the Sierra Club, which opposes both Enbridge pipelines in Minnesota and Michigan. He said the successful Keystone XL effort has taught them important lessons on how to oppose other projects. “It has taught us to never give up,” he said.
Enbridge pointed to the dramatic impact of the Colonial Pipeline’s six-day closure last month as an example of the consequences of scuttling energy infrastructure. The shutdown of the nation’s largest fuel pipeline, caused by a May 7 ransomware attack, spurred a run on gasoline across the Southeast, leaving thousands of gas stations without fuel for days.
During a Senate committee testimony Tuesday, Colonial Chief Executive
emphasized the scale of the pipeline, noting 50 million Americans rely on it to carry fuel to gas stations, as it provides almost half of the fuel consumed on the East Coast.
“Not only do everyday Americans rely on our pipeline operations to get fuel at the pump, but so do cities and local governments, to whom we supply fuel for critical operations, such as airports, ambulances and first responders,” Mr. Blount said in written testimony.
Loula Williams ran a popular theater and candy store in the Greenwood section of Tulsa, Okla., during the 1910s, making her one of the most prominent businesswomen in the neighborhood.
Williams Dreamland Theatre was doing so well that she started two other theaters near Tulsa, according to newspaper accounts and Charles Christopher, her great-grandson. Together, the three formed the Dreamland Theatrical Co.
Ms. Williams bought insurance for her businesses—though like some in the neighborhood, she was only able to patch together partial coverage through several policies. Even that did her no good when white mobs destroyed Williams Dreamland Theatre, along with most of Greenwood, during the city’s race massacre in 1921.
Ms. Williams suffered an estimated $79,164 in losses, according to lawsuits she later filed, equivalent to $1.2 million today. The three insurance companies to which she paid premiums denied her claims.
The massacre took the lives of dozens of Black residents. It also left behind a devastated neighborhood and many property owners struggling to cover their losses. Ms. Williams was one of at least 70 Greenwood property owners who filed insurance claims after the massacre. After many of their claims were denied, Ms. Williams and others sued the insurance companies and later the city of Tulsa, unsuccessfully.
Greenwood property and business owners suffered at least $1.5 million in losses in 1921 dollars, according to a 2001 report from a bipartisan commission appointed by the state to study the event. That’s roughly $22 million in today’s dollars, according to the U.S. Bureau of Labor Statistics. The figure likely underestimates total losses, as not everyone had full insurance coverage or went to court.
Ultimately, insurance companies fell back on an exclusionary clause that prevented payouts on many claims. The policies with that clause said insurers wouldn’t be held liable for loss “caused directly or indirectly by invasion, insurrection, riot, civil war or commotion, or military or usurped power.”
Examined alone, riot exclusions weren’t intentionally racist, said Christopher Messer, a sociology professor at Colorado State University-Pueblo who has studied the Tulsa massacre. However, in the early part of the 1900s, insurance companies knew what the outcome would mean for Black property owners when the clause was enforced, due to the prevalence of such attacks, he said.
“These riots didn’t just happen anywhere—they were primarily characterized by white mobs coming into Black neighborhoods and destroying them. It was never the other way around,” he said.
The insurance issues have long cast a shadow over Tulsa. A lawsuit in Oklahoma filed by survivors and descendants of the massacre against the city of Tulsa and other local agencies cites insurers’ refusals to pay claims. Tulsa residents and politicians have questioned how insurance companies classified the event as well as the implications. Descendants of massacre victims wonder how their ancestors’ assets could have benefited their families today had claims been paid.
After the massacre, Ms. Williams is believed to have sold her two theaters outside Greenwood, her family said, and to have used the funds to help rebuild the one in Greenwood. “Maybe those insurance claims could have just gone to rebuilding the Dreamland, and she could have kept the other theaters,” said Danya Bacchus, Ms. Williams’s great-great-granddaughter. “The empire could have continued to grow.”
Court records don’t paint a complete picture of how insurers responded to the massacre, researchers say. Some business owners may have had their claims honored, while others may have been unable or unwilling to pursue litigation for denied claims.
Some people filed multiple lawsuits. Of the 96 lawsuits filed against more than 30 insurance companies, 76 were dismissed and the other 20 didn’t have documentation of the outcome, according to records maintained by the Oklahoma Historical Society.
Historians said the records indicate that before the massacre some of Greenwood’s most successful businesspeople had to piece together insurance policies with narrow coverage options that didn’t fully protect the value of their properties. Insurance regulators say having multiple policies on a property wasn’t uncommon for the time.
Ms. Williams’s Greenwood properties and their contents, including the theater and the building that housed the confectionery, were worth nearly $80,000, according to her lawsuits. Her eight insurance policies through three companies on her various assets only covered $31,700. Ms. Williams reported paying $865.51 in premiums for policies that were in effect during the massacre, but her lawsuits don’t specify whether that was over one year or multiple years.
After nearly a year and a half of litigation, two insurance companies paid Ms. Williams $566.25 in returned premiums, court records show. Her claims were still denied.
One criticism of insurers at the time was that they didn’t conduct their own due diligence and instead relied on a characterization of the Greenwood event that proved to be false: that the destruction resulted from a riot instigated by unruly Black residents.
“It appears that it was convenient to take the words of the newspapers and the people that did it than to investigate and do the right thing,” said Kevin Matthews, an Oklahoma state senator and founder of the state’s 1921 Tulsa Race Massacre Centennial Commission, which formed in 2016 in part to commemorate the tragedy.
Using the word “riot” to describe what happened remained a sore spot for Black Tulsans for decades, Mr. Matthews said. It suggests that there was a Black uprising and that Greenwood residents destroyed their own neighborhoods, he said. “Many people in my community still have heartburn with that word ‘riot.’ ”
When Mr. Matthews founded the centennial commission in 2016 it was originally called the “Race Riot” commission, he said. In 2017, Oklahoma passed bipartisan legislation to help fund its work. A year later, he and other leaders decided to change “riot” to “massacre” after constituent feedback, altering how people and historical markers in Greenwood refer to the event today.
Investigations into the event by insurers might not have made a difference in denied claims because the exclusion clauses were so broad, said Mr. Messer of Colorado State, including the words “invasion” and “insurrection.” The era’s racism would have made it easy to justify dismissing claims, no matter the actual reason, he added. “And the city really tried to paint this as an event that was caused by militant Blacks,” he said.
Two insurers that sold policies to Greenwood residents still exist today—
Hartford wrote a $1,500 policy for Emma Gurley, who owned multiple Greenwood Avenue properties. Great American wrote a $1,400 policy for a property Hope Watson owned. After denying claims for losses due to the massacre, each company was a defendant in separate lawsuits that were ultimately dismissed.
Each company declined to comment on the lawsuits or riot clauses, citing the difficulty of getting information about policies written decades ago. “Unfortunately, it is extremely difficult to comment on litigation and what coverage may have been available a century ago,” said a spokesman for The Hartford.
have made acquisitions that could give the two companies control over the policies cited in as many as half of the 96 insurance lawsuits, with 39 for CNA and nine for Chubb. CNA and Chubb declined to comment.
Riot clauses date to at least the late 19th century, likely influenced by the tumult of the Civil War and concerns around labor strife, said Robert Hartwig, an insurance researcher and director of the Center for Risk and Uncertainty Management at the University of South Carolina.
By the 1930s, insurance regulators set out to simplify policy language. The National Association of Insurance Commissioners proposed removing riot exclusions in 1937, according to the proceedings of its annual meeting that year. The proceedings said the riot exclusion wasn’t needed as manufacturers, who risked facing labor riots, were often able to secure coverage against riots by getting endorsements, or riders, at no extra cost. The proceedings also noted that riots rarely resulted in building fires.
Assessing the risk associated with riots paved the way for the industry to eliminate riot clauses, said Mr. Hartwig. Since the 1950s, policies have generally covered multiple perils such as riots and civil unrest, he said, including riots in the 1960s and nationwide protests in 2020.
After the Greenwood massacre, some property owners took out loans or mortgaged their land to rebuild. By 1941, there were more than 240 businesses in the section, according to a recent copy of the neighborhood’s application for the National Register of Historic Places.
Ms. Williams’s Dreamland theater doesn’t appear to have ever returned to its prior prosperity, Ms. Williams’s great-granddaughter Jan Elaine Christopher said, citing a 1924 letter she wrote to her son, William Danforth Williams, about the theater’s struggles.
“At first, the whole family was running it,” Ms. Christopher said. “And then after everything happened, it looks like she was just running everything, pretty much by herself. So it was a lot smaller.”
Several of Ms. Williams’s descendants said the trauma of the massacre played a role in her death in 1927 at age 47. Her husband, John Wesley Williams, who owned an auto repair shop in Greenwood, died in 1939. The theater is believed to have been sold after her death, but the family didn’t know any details of a sale. Today, part of the interstate highway sits where it once stood.
Name another fund manager that sells “Invest In The Future” onesies and “Analyst” hoodies on its website.
Just as unusual as ARK Invest’s marketing has been its performance, growing its assets more quickly than any active exchange-traded fund firm in history.
firm went from about $3.5 billion under management across several funds shortly before the pandemic struck to hit the $50 billion mark a year later. But that rapid growth has come back to bite her investors.
Even after a major tumble the past few months, the actual damage isn’t obvious from a longer-term look at her funds’ performance charts. So many investors piled in relatively recently, though, that her actual wealth-creation record is unimpressive. Analysts at Bespoke Investment Group calculate that the money-weighted annualized return of her funds since inception was 5.24% through Monday. That is far less than a steady investment in a plain vanilla S&P 500 index fund.
And ARK Invest’s paper gains have depended on some uncomfortably concentrated positions. There are big, liquid bets such as
—which had just $58 million of sales last year—that could get hit hard if ARK begins to unload a lot of shares as investor cash leaves the funds. ARK funds owned 16.52% of the company at the end of 2020, more than any other institution by far, according to FactSet. Intellia rallied by 470% from the beginning of 2020 to its peak this January but has since retreated by 27%, giving it a current market cap of around $4.3 billion. Another stock with a similar pattern and ownership is
The first word on what Wall Street is talking about.
Ms. Wood’s “disruptive innovation” jargon may be somewhat novel. What her investors are experiencing isn’t. Fund managers like Gerald Tsai in the 1960s who rode Polaroid and Xerox to stardom or various dot-com visionaries in the late 1990s wound up doing poorly for clients who discovered them after they became hotshots. The culprit is unrealistic expectations and reversion to the mean for the bubbly sectors that got them there. Analyst Meb Faber points out that not one of the five Morningstar “fund managers of the decade” through 2010 even managed to beat the market in the next 10 years. The best of the bunch, Bruce Berkowitz’s Fairholme Fund, became the worst.
Cos.’ pretax catastrophe losses more than doubled from a year ago for the company’s first quarter, due in part to winter storms.
The property-casualty insurance company logged pretax catastrophe losses of $835 million. A year earlier, those were $333 million.
The three-month period was the company’s highest first quarter ever of catastrophe losses, Chairman and Chief Executive
said in prepared remarks. The company said those losses were mainly from winter and wind storms in the U.S.
Travelers reported earnings of $733 million, or $2.87 a share. The company’s profit rose from $600 million, or $2.33 a share, a year ago. Core income was $2.73 a share. According to FactSet, analysts were expecting $2.37 a share in core income.
Revenue increased to $8.31 billion, up from $7.91 billion a year ago. Net written premiums at the company rose a little over 2% to $7.51 billion. Analysts were expecting net written premiums of $7.55 billion.
The company also said its board approved $5 billion more in share buybacks.