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Category: Taxation

  • MIL-OSI USA: Florida Financial Advisor Charged with Promoting Illegal Tax Shelter, Stealing Clients’ Funds and Money Laundering

    Source: US State of Vermont

    A federal grand jury in Gulfport, Mississippi, returned an indictment, unsealed yesterday, charging a Florida financial advisor with a years-long scheme to promote and operate an illegal tax shelter, stealing some of his clients’ funds and money laundering.

    According to the indictment, Stephen T. Mellinger III, of Florida, was a securities broker, financial advisor and insurance salesman. Beginning in late 2013, Mellinger allegedly conspired with several others to defraud the IRS by promoting an illegal tax shelter.

    Mellinger allegedly instructed clients participating in the shelter, including clients in Mississippi, to transfer money to a company controlled by Mellinger or his co-conspirators in the amount they wished to claim as a deduction on their tax returns. The conspirators then allegedly returned the money to a bank account that clients controlled less a percentage fee that they charged for their services. Even though tax shelter clients received their money back, Mellinger allegedly directed them to claim the transfer to the company as a deduction on their tax returns, and to label the deduction as a “royalty” payment. Mellinger allegedly earned more than $3 million in fees from the shelter.

    Also, in January 2016, the federal government allegedly seized funds from some of Mellinger’s clients, who were engaged in a scheme to defraud health care benefit programs, including TRICARE, the U.S. Department of Defense’s health care benefit program. Mellinger conspired with a close relative to take advantage of the seizure to steal some of the money that those clients had transferred through the tax shelter. Mellinger then allegedly laundered the stolen funds, which he knew were proceeds of healthcare fraud. Ultimately, he allegedly used some of the funds he stole from his clients to buy a home in Delray Beach, Florida.

    Mellinger was charged with conspiracy to defraud the United States, aiding in the preparation of false tax returns, conspiracy to commit wire fraud, conspiracy to commit money laundering and money laundering. If convicted, Mellinger faces a maximum penalty of five years in prison for conspiring to defraud the IRS, a maximum penalty of three years in prison for each substantive count of aiding in the preparation of false tax returns, a maximum penalty of 20 years in prison for conspiring to commit wire fraud, a maximum penalty of 20 years in prison for conspiring to commit money laundering and a maximum penalty of 20 years in prison for each substantive count of money laundering. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

    Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Todd W. Gee for the Southern District of Mississippi made the announcement.

    IRS Criminal Investigation and Defense Criminal Investigative Service are investigating the case.

    Trial Attorneys William Montague, Richard J. Hagerman and Matthew Hicks of the Tax Division, Assistant U.S. Attorney Charles W. Kirkham for the Southern District of Mississippi and Trial Attorneys Emily Cohen and Jasmin Salehi Fashami of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) are prosecuting the case.

    An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

    MIL OSI USA News –

  • MIL-OSI: Results for the Period Ended 30 June 2024

    Source: GlobeNewswire (MIL-OSI)

    Octopus Future Generations VCT plc

    Results for the Period Ended 30 June 2024

    Octopus Future Generations VCT plc (‘Future Generations VCT’ or the ‘Company’) is backing businesses that aim to address society’s biggest challenges, providing an opportunity for investors to share in the growth of ambitious, purpose‑driven companies.

    The Company is managed by Octopus AIF Management Limited (the ‘Manager’), who has delegated investment management to Octopus Investments Limited (‘Octopus’ or ‘Portfolio Manager’) via its investment team Octopus Ventures.

    The Company today announces the unaudited financial report for the twelve months ended 30 June 2024.

    Chair’s statement

    Highlights

    • £46.1m in total net assets
    • 86.8p Net Asset Value (NAV) per share
    • 36 portfolio companies 

    I am pleased to present the unaudited financial report and accounts for the Company for the twelve months to 30 June 2024.

    I would like to welcome all new shareholders to the Company. Future Generations VCT invests in exciting early-stage companies which aspire to address current environmental and societal issues.

    The NAV per share at 30 June 2024 was 86.8p, which represents a net decrease of 6.9p per share from 31 December 2023, the latest released NAV. In the twelve months to 30 June 2024, we utilised £8.3 million of our cash resources, including £7.2 million which was invested into 13 new portfolio companies. The cash balance of £17.5 million as at 30 June 2024 represents 37.8% of net assets at that date. The loss made in the period to 30 June 2024 was £4.0 million. This decline is mainly caused by the downward movements in some portfolio company valuations. It is reflective of some company specific performance challenges and the difficult funding conditions in the early stage space. Given the Company is still a new VCT, many of its portfolio companies are at the beginning of their journey and will likely require further funding to succeed, so it is to be expected to see under performance or even failures before any growth in value of companies which are ultimately successful.

    Fundraise
    On 31 January 2024 we launched a new offer to raise up to £15 million, and to date we have raised £3.2 million. The offer will close for new applications on 27 January 2025, or earlier at the Board’s discretion. We would like to take this opportunity to thank all shareholders for their continued support.

    As investors will be aware, the intention is to invest in businesses which meet one of three key themes, which we believe demonstrate good investment prospects as well as having the potential to transform the world we live in for the better.

    VCT qualification
    I am pleased to report that in April 2024, the Company met the requirement for 80% of the Company’s funds to be invested in VCT qualifying holdings by 1 July 2024 (for funds raised up to 30 June 2022). The remainder will be invested in permitted non-VCT qualifying investments or cash.

    In November 2023, a ten-year extension was announced to the ‘sunset clause’ (a retirement date for the VCT scheme), meaning VCT tax reliefs will be available until 5 April 2035. This extension passed through Parliament in February 2024 and on 3 September the Treasury brought into effect the extension through The Finance Act 2024.

    Principal risks and uncertainties
    The Board continues to review the risk environment in which the Company operates on a regular basis. The principal risks as described on pages 32 to 34 of the Annual Report for the year ended 30 June 2023 remain, however there is increased exposure to investment performance and loss of key people These will be reported on in detail in the annual report to 31 December 2024.

    Change to year end
    In 2023, the Board reviewed and approved a proposal to move the Company’s year-end from 30 June to 31 December. This change is largely being driven by operational efficiency gains by aligning year-end periods with other funds with which the Company co-invests. As a result, shareholders will receive an annual report for 31 December 2024 covering an extended 18-month period. After this, the normal cadence of reporting will resume.

    Board of Directors
    As announced in our half-yearly report to 31 December 2023, Ajay Chowdhury was appointed as an independent Non-Executive Director on 1 March 2024. Ajay is a serial entrepreneur, venture capitalist and author, and recently retired from his role as senior partner at the Boston Consulting Group. We look forward to benefitting from his wealth of experience in the early-stage venture ecosystem.

    AGM
    The AGM will take place on 10 December 2024 from 10:00am and will be held at the offices of Octopus Investments Limited, 33 Holborn, London, EC1N 2HT. Full details of the business to be conducted at the AGM are given in the Notice of AGM.

    Shareholders’ views are important, and the Board encourages shareholders to vote on the resolutions within the Notice of AGM using the proxy form, or electronically at www.investorcentre.co.uk/eproxy. The Board has carefully considered the business to be approved at the AGM and recommends shareholders to vote in favour of all the resolutions being proposed, as the Board will be doing.

    Outlook
    The decline in the NAV is disappointing, with some of the portfolio companies struggling to scale, secure customer wins and successfully fundraise meaning they are not achieving the milestones set at the time the Company invested. With companies not able to prove their business models, we will unfortunately see companies fail. The Board is mindful that it is not an unusual outcome for a Company at this stage of its investment life cycle, with any failures likely preceding valuation growth which is expected once the portfolio matures. While the Company continues to add to its portfolio, there is also currently a greater concentration of value in fewer companies, so performance will be more sensitive to valuation movements in the underlying holdings than if the portfolio was larger.

    The decline has been amplified by challenging global economic conditions which have characterised the last few years particularly impacting on growth and early-stage businesses. We are hopeful that there are signs of recovery on the horizon, with the Bank of England cutting interest rates for the first time since 2020 and the conclusion of the UK General Election bringing more political certainty and stability. The exit environment is also starting to show signs of recovery, with Initial Public Offerings (IPOs) having their strongest start to the year since the peak of 2021, bringing renewed optimism in the market1. Together, this gives us some confidence that the challenging environment our portfolio companies are operating in will start to improve, and with diversification across the three investment themes, it should mean the Company is well positioned to generate long-term value for shareholders.

    I would like to conclude by thanking both my Board colleagues and the Octopus team on behalf of all shareholders for their hard work. The Board’s long-term view of early-stage venture capital remains positive, and I am looking forward to seeing what the remainder of the year brings for your Company.

    Helen Sinclair
    Chair
    27 September 2024

    1 Pitchbook, European Venture Report Q2 2024 https://pitchbook.com/news/reports/q2-2024-european-venture-report#:~:text=Our%20Q2%202024%20European%20Venture,most%2Dactive%20vertical%20after%20SaaS.

    Portfolio Manager’s review

    Focus on Future Generations VCT’s investments
    Below is a breakdown of the 36 investments held as at 30 June 2024, showing the proportion and value of the portfolio in each investment theme:

    Proportion by number of portfolio companies in each theme
    Revitalising healthcare: 50%
    Empowering people: 31%
    Building a sustainable planet: 19%

    Value of the portfolio in each theme
    Revitalising healthcare: £12.3m
    Empowering people: £10.4m
    Building a sustainable planet: £5.9m

    Overview of investments
    The Company completed 7 new investments in the six months to 30 June 2024 (comprising a total of £5.2 million) and 2 further investments after the reporting date totalling £0.5 million. More information on three of these businesses can be found below:

    A selection of our completed investments

    Empowering people
    Swiipr
    Swiipr has developed a digital payments platform specifically for the airline industry. The platform enables airlines to instantly compensate passengers in cases of disrupted or cancelled flights, using virtual or pre-paid cards. Swiipr aims to streamline payment processing for airlines and improve the reimbursement experience for affected passengers.

    Building a sustainable planet
    Drift
    Drift Energy is designing sailing vessels and the routing algorithms required to capture deep water wind energy and convert it into onboard hydrogen gas. This would then be transported back to shore using a fully integrated desalination, electrolysis and storage system.

    Revitalising healthcare
    Manual
    Manual is looking to become the go-to global platform to increase healthy lifespan and build a series of direct-to-consumer health brands for high importance, non-critical areas of health. To achieve this, it will provide easy to access advice and medical support for diagnosis, custom treatment plans and holistic care to induce long-term behaviour change.

    Top ten investments

    Portfolio company Cost Valuation at
    30 June 2024    		 Investment theme
    1. Perk Finance, S.L. (t/a* Cobee) £2.6m £3.7m Empowering people
    2. HelloSelf Limited £2.6m £2.6m Revitalising healthcare
    3. Neat SAS £0.8m £2.2m Building a sustainable planet
    4. Infinitopes Ltd £1.6m £1.6m Revitalising healthcare
    5. TYTN Ltd (t/a TitanML) £0.5m £1.5m Building a sustainable planet
    6. Mr & Mrs Oliver Ltd (t/a Skin + Me) £1.0m £1.4m Revitalising healthcare
    7. Apheris AI GmbH £1.2m £1.2m Empowering people
    8. Remofirst, Inc. £1.2m £1.2m Empowering people
    9. Intrinsic Semiconductor Technologies Ltd £0.9m £1.0m Empowering people
    10. Inflow Holdings Inc. £1.0m £1.0m Revitalising healthcare

    * Trading as
      

    Portfolio engagement – D&I and carbon emission measurement
    As part of our strategy, we require portfolio companies to put in place a Diversity and Inclusion policy (D&I) and an Anti-Harassment policy. We also engage with each company to help them understand their greenhouse gas emissions and support them to take action to minimise them. You can see how we are progressing with these goals below, as at the date of this report:

    D&I policy status
    Policy in place: 36
    In progress: 0

    Engaged in monitoring 2023 greenhouse gas emissions
    Signed up: 12
    Introduced: 22
    In progress: 2

    Focus on performance
    The NAV of 86.8p per share at 30 June 2024 represents a decrease of 6.9p per share versus a NAV of 93.7p per share as at 31 December 2023. The decline in valuation over the six-month period has been driven by the downward valuation movements across 13 companies which saw a collective decrease in valuation of £6.5 million. The businesses that contributed most significantly to this were Tympa Health, Pear Bio and Elo Health. In the six months, the Company further invested into Tympa Health as this was the committed second tranche of the original investment case from 2023. During the investment period, Tympa Health over-invested in growth and has now had to make significant cost cuts and changes to senior management whilst running a fundraise process. It has successfully secured an external lead investor, but at a reduced valuation and the Company now sits behind a large preference stack, meaning that other investors get paid back first before the Company would see any returns. Pear Bio has also had to significantly reduced its cash burn but has limited runway and needs to further fundraise, so the valuation has been reduced to reflect this risk. Elo Health has struggled to find a market fit and execute on the investment thesis, so to extend its cash runway it has had to raise an investment round at a reduced valuation. These three valuation movements account for 87.6% of the total decline in the six months.

    Octopus Ventures believes that some of the companies which have seen decreased valuations in the year have the potential to overcome the issues they face and get their growth plans back on track. Octopus Ventures will continue to work with them to help them realise their ambitions. In some cases, if a company is achieving
    its performance milestones, the support offered could include further funding, to ensure a business has the capital it needs to execute on its strategy.

    Conversely, 6 companies saw an increase in valuation in the period, delivering a collective increase in valuation of £2.9 million. These valuation increases reflect businesses which have successfully concluded further funding rounds, grown revenues or met certain important milestones. Notable strong performers in the portfolio include Neat and TitanML, both of which have shown impressive capital efficient growth. These strong performers demonstrate that there are opportunities available for companies to scale.

    At this early stage of the Company’s life cycle, it is to be anticipated that failures will likely precede valuation growth, which takes longer as the portfolio companies have to achieve their agreed milestones and mature.

    The gain on Future Generation’s uninvested cash reserves was £0.9 million in the twelve months to 30 June 2024 (31 December 2023: gain of £0.5 million), driven by returns on money market funds. The Board’s objective for these investments is to generate sufficient returns through the cycle to cover costs, at limited risk to capital.

    Outlook
    We are pleased to report the Company’s first disposal as it was agreed that Cobee (an employee benefits and engagement platform) will be acquired by Pluxee Group as part of its strategic growth plan. The transaction is subject to approval by the Spanish regulatory authorities over the coming months, so we look forward to reporting further after completion has taken place. The transaction is a great result for the Company at such an early point in its investment lifecycle and a good proof point of the investment strategy.

    The decline in NAV over the six-month period is disappointing but attributable to both the stage of the Company and the headwinds the portfolio companies have been facing. We continue to closely monitor the portfolio to ensure support and resources are being directed in the most impactful way, both through Octopus-appointed non-executive directors or monitors on the Boards and our in-house People and Talent team. This team works directly with the portfolio company management teams, offering training and recruitment support to ensure the best talent pool is being explored to help drive success in this more challenging climate.

    We are excited to have the opportunity to continue to scale the Company, support its ambition to make the world a better place for future generations, and hope to deliver attractive returns to shareholders.

    Directors’ responsibilities statement

    The Directors confirm that to the best of their knowledge:

    • the financial statements for the twelve months ended 30 June 2024 have been prepared in accordance with ‘Financial Reporting Standard 104: Interim Financial Reporting’ issued by the Financial Reporting Council;
    • the financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
    • the report includes a fair review of the information required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules, being:
      • we have disclosed an indication of the important events that have occurred during the twelve months of the period and their impact on the set of financial statements;
      • we have disclosed a description of the principal risks and uncertainties for the remaining six months of the period; and
      • we have disclosed a description of related party transactions that have taken place in the twelve months of the current financial period, that may have materially affected the financial position or performance of the Company during that period and any changes in the related party transactions described in the last annual report that could do so.

    By order of the Board

    Helen Sinclair
    Chair
    27 September 2024

    Income statement

      Unaudited Unaudited Audited
      Twelve months to 30 June 2024 Six months to 31 December 2023 Year to 30 June 2023
      Revenue Capital Total Revenue Capital Total Revenue Capital Total
      £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
    Net loss on valuation of fixed asset
    investments    		 — (3,495) (3,495) — (136) (136) — (6) (6)
    Investment management fees (238) (712) (950) (117) (350) (467) (174) (522) (696)
    Investment income 973 — 973 515 — 515 424 — 424
    Other expenses (535) — (535) (246) — (246) (500) — (500)
    Profit/ (loss) before tax 200 (4,207) (4,007) 152 (486) (334) (250) (528) (778)
    Tax — — — — — — — — —
    Profit/ (loss) after tax 200 (4,207) (4,007) 152 (486) (334) (250) (528) (778)
    Earnings per share – basic and diluted 0.4p (8.4)p (8.0)p 0.3p (1.0)p (0.7)p (0.6)p (1.3)p (1.9)p
    • The ‘Total’ column of this statement is the profit and loss account of Future Generations VCT; the supplementary revenue return and capital return columns have been prepared under guidance published by the Association of Investment Companies.
    • All revenue and capital items in the above statement derive from continuing operations.
    • Future Generations VCT has only one class of business and derives its income from investments made in shares and securities and from bank and money market funds. Future Generations VCT has no other comprehensive income for the period.

    The accompanying notes form an integral part of the financial statements.

    Balance sheet

      Unaudited Unaudited Audited
      As at 30 June 2024 As at 31 December 2023 As at 30 June 2023
      £’000 £’000 £’000 £’000 £’000 £’000
    Fixed asset investments   28,566   26,729   24,895
    Current assets:            
    Applications cash* 153   100   370  
    Debtors 212   240   379  
    Cash at bank 192   107   152  
    Money market funds 17,265   19,998   20,140  
        17,822   20,445   21,041
    Creditors: amounts falling due within one year (256)   (177)   (518)  
    Net current assets   17,566   20,268   20,523
                 
    Net assets   46,132   46,997   45,418
                 
    Share capital   53   50   48
    Share premium   51,177   48,372   46,461
    Capital reserve realised   (1,352)   (990)   (640)
    Capital reserve unrealised   (3,492)   (133)   3
    Revenue reserve   (254)   (302)   (454)
    Total equity shareholders’ funds   46,132   46,997   45,418
    Net asset value per share   86.8p   93.7p   94.3p

    * Cash received from investors but not yet allotted.

    The accompanying notes form an integral part of the financial statements.

    The statements were approved by the Directors and authorised for issue on 27 September 2024 and are signed on their behalf by:

    Helen Sinclair
    Chair
    Company Number: 13750143

    Statement of changes in equity

      Share capital £’000 Share premium £’000 Capital reserve realised
    £’000    		 Capital reserve unrealised
    £’000    		 Revenue reserve
    £’000    		 Total
    £’000
    As at 1 July 2023 48 46,461 (640) 3 (454) 45,418
    Comprehensive income for the year:            
    Management fees allocated as capital expenditure — — (712) — — (712)
    Net loss on fair value of fixed asset investments — — — (3,495) — (3,495)
    Profit after tax — — — — 200 200
    Total comprehensive income for the year — — (712) (3,495) 200 (4,007)
    Contributions by and distributions to owners:            
    Shares issued 5 4,814 — — — 4,819
    Share issue costs — (98) — — — (98)
    Total contributions by and distributions to owners 5 4,716 — — — 4,721
    Balance as at 30 June 2024 53 51,177 (1,352) (3,492) (254) 46,132

    The accompanying notes form an integral part of the financial statements.

      Share capital £’000 Share premium £’000 Capital reserve realised
    £’000    		 Capital reserve unrealised
    £’000    		 Revenue reserve
    £’000    		 Total
    £’000
    As at 1 July 2023 48 46,461 (640) 3 (454) 45,418
    Comprehensive income for the year:            
    Management fees allocated as capital expenditure — — (350) — — (350)
    Net loss on fair value of fixed asset investments — — — (136) — (136)
    Profit after tax — — — — 152 152
    Total comprehensive income for the year — — (350) (136) 152 (334)
    Contributions by and distributions to owners:            
    Shares issued 2 1,971 — — — 1,973
    Share issue costs — (60) — — — (60)
    Total contributions by and distributions to owners 2 1,911 — — — 1,913
    Balance as at 31 December 2023 50 48,372 (990) (133) (302) 46,997

    The accompanying notes form an integral part of the financial statements.

      Share capital £’000 Share premium £’000 Capital reserve realised
    £’000    		 Capital reserve unrealised
    £’000    		 Revenue reserve
    £’000    		 Total
    £’000
    As at 1 July 2022 33 31,572 (118) 9 (204) 31,292
    Comprehensive income for the year:            
    Management fees allocated as capital expenditure — — (522) — — (522)
    Net loss on fair value of fixed asset investments — — — (6) — (6)
    Loss after tax — — — — (250) (250)
    Total comprehensive income for the year — — (522) (6) (250) (778)
    Contributions by and distributions to owners:            
    Shares issued 15 15,164 — — — 15,179
    Share issue costs — (275) — — — (275)
    Total contributions by and distributions to owners 15 14,889 — — — 14,904
    Balance as at 30 June 2023 48 46,461 (640) 3 (454) 45,418

    The accompanying notes form an integral part of the financial statements.

    Cash flow statement

      Unaudited Unaudited Audited
      Twelve months to Six months
    to    		 Year
    to
      30 June 31 December 30 June
      2024 2023 2023
      £’000 £’000 £’000
    Cash flows from operating activities      
    Loss before tax (4,007) (334) (778)
    Loss on valuation of fixed asset investments 3,495 136 6
    Decrease/(increase) in debtors 167 138 (103)
    Decrease in creditors (45) (71) (325)
    Outflow from operating activities (390) (131) (1,200)
    Cash flows from investing activities      
    Purchase of fixed asset investments (7,166) (1,970) (23,238)
    Outflow from investing activities (7,166) (1,970) (23,238)
    Cash flows from financing activities      
    Application account inflow 4,602 1,685 13,634
    Application account outflow
    Proceed from share issues    		 (4,819)
    4,819    		 (1,955)
    1,955    		 (15,179)
    15,179
    Share issue costs (98) (41) (275)
    Inflow from financing activities 4,504 1,644 13,359
    Decrease in cash and cash equivalents (3,052) (456) (11,079)
    Opening cash and cash equivalents 20,662 20,662 31,741
    Closing cash and cash equivalents 17,610 20,206 20,662
    Cash and cash equivalents comprise      
    Money Market Funds 17,265 19,998 20,140
    Cash at Bank
    Applications cash    		 192
    153    		 107
            100    		 152
    370
    Closing cash and cash equivalents 17,610 20,205 20,662

    The accompanying notes form an integral part of the financial statements.

    Condensed notes to the financial report

    1. Basis of preparation
    The unaudited results which cover the twelve months to 30 June 2024 have been prepared in accordance with the Financial Reporting Council’s (FRC) Financial Reporting Standard 104 Interim Financial Reporting (January 2022) and the Statement of Recommended Practice (SORP) for Investment Companies re-issued by the Association of Investment Companies in July 2022.

    The Directors consider it appropriate to adopt the going concern basis of accounting. The Directors have not identified any material uncertainties to the Company’s ability to continue to adopt the going concern basis over a period of at least twelve months from the date of approval of the financial statements. In reaching this conclusion, the Directors have taken into account the potential impact on the economy including inflation and the recession.

    The principal accounting policies have remained unchanged from those set out in the Company’s 2023 Annual Report and Accounts.

    2. Publication of non-statutory accounts
    The unaudited financial report for the twelve months ended 30 June 2024 does not constitute Statutory Accounts within the meaning of s.415 of the Companies Act 2006 and has not been delivered to the Registrar of Companies. The comparative figures for the year ended 30 June 2023 have been extracted from the audited financial statements for that year, which have been delivered to the Registrar of Companies. The independent auditor’s report on those financial statements, in accordance with Chapter 3, Part 16 of the Companies Act 2006, was unqualified. This financial report has not been reviewed by the Company’s auditor.

    3. Earnings per share
    The loss per share is based on 50,107,452 Ordinary shares (30 June 2023: 40,987,288, 31 December 2023: 48,725,532) being the weighted average number of shares in issue during the period. There are no potentially dilutive capital instruments in issue and so no diluted returns per share figures are relevant. The basic and diluted earnings per share are therefore identical.

    4. Net asset value per share

      30 June 2024 31 December 2023 30 June 2023
    Net assets (£’000) 46,132 46,997 45,418
    Shares in issue 53,160,670 50,165,822 48,138,337
    Net asset value per share (p) 86.8 93.7 94.3

    5. Allotments
    During the twelve months to 30 June 2024, 5,022,333 shares were issued at a weighted average price of 95.2p (30 June 2023: 15,569,169 shares at a weighted average price of 98.6p, 31 December 2023: 2,027,485 shares at a weighted average price of 97.3p per share).

    6. Transactions with the Manager and Portfolio Manager
    Future Generations VCT is classified as a full-scope Alternative Investment Fund (AIF) under the Alternative Investment Fund Management Directive (the ‘AIFM Directive’). Future Generations VCT has appointed Octopus AIF Management Limited to provide the services of an Alternative Investment Fund Manager (AIFM) of a full scope AIF. In accordance with its power to do so under AIFMD, Octopus AIF Management Limited has delegated portfolio management to Octopus Investments Limited, whilst retaining the obligations of a risk manager.

    Future Generations VCT paid Octopus AIF Management Limited £950,000 in the period as a management fee (30 June 2023: £696,000, 31 December 2023: £467,000). The annual management charge (AMC) is based on 2% of Future Generations VCT’s NAV. The AMC is payable quarterly in advance and calculated using the latest published NAV of Future Generations VCT and the number of shares in issue at each quarter end. Once the quarter has ended, an adjustment will be made if the NAV at the end of the current quarter is calculated and which differs from the NAV as at the end of the previous quarter.

    Octopus also provides Non-Investment Services to Future Generations VCT, payable quarterly in advance. The fee is 0.3% of Future Generations VCT’s NAV, calculated at quarterly intervals. The Non-Investment Services Agreement (NISA) fee is calculated using the latest published NAV of Future Generations VCT and the number of shares in issue at each quarter end. As with the AMC, an adjustment will be made once the quarter has ended if the NAV at the end of the current quarter is calculated and which differs from the NAV as at the end of the previous quarter. During the period £143,000 was paid to Octopus for Non-Investment Services (30 June 2023: £122,000, 31 December 2023: £70,000).

    In addition, Octopus is entitled to performance-related incentive fees, subject to Future Generations VCT’s total return at year end exceeding the total return at the previous year end when an incentive fee was paid or 97p if the first incentive fee has not yet been paid (the ‘Excess’), equal to 20% of the Excess. Future Generations VCT’s total return at year end exceeded the total return at the previous year end when an incentive fee was paid or 97p if the first incentive fee has not yet been paid (the ‘Excess’), equal to 20% of the Excess. No performance fee will be paid prior to the financial period ending 30 June 2025, dividends (paid or declared) being equal to or greater than 10p per Ordinary share and the total return exceeding 120p.

    The cap relating to Future Generations VCT’s total expense ratio, that is the regular, recurring costs of Future Generations VCT expressed as a percentage of its NAV, above which Octopus have agreed to pay, is 3.0%, and is calculated in accordance with the AIC Guidelines.

    7. Related party transactions
    Several members of the Octopus investment team hold non-executive directorships as part of their monitoring roles in Future Generations VCT’s portfolio companies, but they have no controlling interests in those companies.

    Emma Davies, a former Non-Executive Director of Future Generations VCT, previously held the role of co-CEO of Octopus Ventures. On 24 March 2023, Emma Davies ceased to be employed by Octopus Capital Limited and therefore she is no longer considered a related party. Emma retired as a Non-Executive Director of Future Generations VCT on 31 March 2024.

    No dividends have been paid to the Directors of Future Generations VCT.

    8. Voting rights and equity management
    The following table shows the percentage voting rights held by Future Generations VCT in each of the top ten investments, on a fully diluted basis.
                                                            

     

    Investments

    		 30 June 2024
    % voting rights held by
    Future Generations VCT
    Perk Finance, S.L. t/a Cobee 2.8%
    HelloSelf Limited 4.1%
    Neat SAS 3.2%
    Infinitopes Ltd 4.4%
    TYTN Ltd (t/a TitanML) 4.2%
    Mr & Mrs Oliver Ltd (t/a Skin + Me) 0.6%
    Apheris AI GmbH 3.2%
    Remofirst, Inc. 1.4%
    Intrinsic Semiconductor Technologies Ltd 5.1%
    Inflow Holdings Inc. 1.9%

    9. Post balance sheet events
    The following events occurred between the balance sheet date and the signing of this financial report:
    ● 2 new investments completed totalling £0.5 million.
      

    10. Financial Report
    The unaudited results which cover the twelve months to 30 June 2024 will shortly be available to view at https://octopusinvestments.com/our-products/venture-capital-trusts/octopus-future-generations-vct/ . 
    A copy of the report will be submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism

    For further information please contact:

    Rachel Peat  
    Octopus Company Secretarial Services Limited
    Tel: +44 (0)80 0316 2067

    LEI: 213800AL71Z7N2O58N66

    The MIL Network –

  • MIL-OSI United Nations: Secretary-General’s remarks to the annual meeting of G77 Foreign Ministers

    Source: United Nations secretary general

    Mr. President, Excellencies, Ladies and Gentlemen,

    Let me begin by congratulating Uganda on its leadership of the G77 plus China this year.

    And I want to salute your entire membership.

    For 60 years – year in and year out — the G77 plus China has been on the frontlines for fairness, equality, justice and solidarity.

    You have been the engine driving progress to eradicate poverty, to fight inequalities, to root out injustices in our post-colonial world.

    And you have been shining a spotlight on the need for fundamental reforms of the multilateral system.

    Reforms of the international financial architecture and the Security Council to make them more legitimate and more effective. 

    Reforms to make sure our institutions reflect the realities of today’s world and respond to today’s challenges instead of the world and the challenges of 1945. 

    We have taken some steps forward with the adoption of the Pact for the Future, the Declaration on Future Generations, and the Global Digital Compact.

    Of course, not everything we may have hoped for was in the final package. 

    But none of the achievements would have been possible without your insistence and persistence.  If you allow me an image, if you compare the documents that we approved on Sunday with the continued documents of the G7 and the G77, we have to recognize that they are much closer to the documents of the G77.  One 7 makes a lot of difference. 

    I commend the G77 plus China for always pushing for maximum ambition and look forward to working with you as we continue pursuing the justice your countries deserve – and our world needs.

    We still have a long way to go.

    Our world is on a knife’s edge.

    Climate chaos is worsening.

    Conflicts are raging.

    Human rights are floundering.

    Inequality and injustice are eroding trust and undermining the social contract of societies.    

    The rights of women and girls are being snuffed out.

    Entire economies are drowning in debt.  

    The digital divide is fast becoming a gaping chasm.

    And the Sustainable Development Goals are hanging by a thread.

    We need action on a number of fronts in line with what was approved in the Summit of the Future. 

    First, financial justice.

    Finance is the fuel to drive progress on sustainable development.

    Yet so many countries remain locked out from accessing capital for essential investments.

    This situation is unsustainable – and a recipe for social unrest. 

    That is why we have been pushing for fundamental reforms to the outdated, ineffective and unfair international financial system, and an SDG Stimulus to provide developing countries with the resources they need while seeking medium- and long-term solutions.
     
    We must keep working to make Multilateral Development Banks bigger, bolder and better, enabling them to massively scale up affordable financing for sustainable development, namely in developing countries. 

    We must expand contingency financing through the recycling of Special Drawing Rights that until now have essentially benefitted rich countries and not those that have needed it the most.

    We must promote effective long-term debt restructuring that puts people and planet at the centre.

    And we must keep on working for a more inclusive and effective international tax system. I applaud the Ad Hoc Committee for drafting ambitious and practical Terms of Reference for a UN Framework Convention on International Tax Cooperation.

    Second, climate justice.

    We urgently need supercharged action to reduce emissions and avoid the worst of climate chaos.

    This must be in line with the principle of common but differentiated responsibilities and respective capabilities, in light of different national circumstances.

    Every country must create new national climate action plans – or NDCs – well ahead of COP30, that align with 1.5 degrees and put the world on track to phase out fossil fuels – fast and fairly.
     
    G20 countries – which together produce eighty percent of global emissions – have a responsibility to lead. I am working closely with President Lula of Brazil to drive action in the G20.

    And I urge every developing country to make sure new national climate plans double as investment plans and boost sustainable development – harnessing renewables to power prosperity and pull people out of poverty.

    The United Nations is mobilizing our entire system to support these efforts through the Climate Promise initiative.

    We also need a strong finance outcome – including on innovative finance – from COP29. This also means significant contributions to the new Loss and Damage Fund.

    I will continue to press developed countries to honour their promises;

    Doubling adaptation funding to at least $40 billion a year by 2025.

    Showing concretely how the enormous adaptation finance gap will be closed.

    And everyone on earth must be protected by an effective early warning system by 2027.

    We must address the injustices of the energy transition.

    Developing countries are being locked out of the renewables revolution.

    Investments in developing countries outside of China and India are stuck in a time warp reflecting 2015 levels. Africa attracted just 1% of renewable installations last year. It is clear that we must support developing countries to have the resources and the capacity to attract the investments that are necessary for the renewables revolution. 

    The UN Panel on Critical Energy Transition Minerals has identified ways to ground the renewables revolution in justice and equity, spur sustainable development, and power prosperity in resource rich developing countries.

    We must ensure that the race to net zero does not lead to developing countries being trampled underfoot.  

    Third, technological justice.

    Technology must benefit all of humanity.

    The Global Digital Compact is a blueprint for how governments, together with tech companies, academia and civil society, can work together to make sure new technologies benefit everybody and to manage the risks they pose – including Artificial Intelligence.

    AI has the potential to be an excellent servant but also a dangerous master.

    I am pleased that the Compact includes proposals building on the resolution led by China on capacity building for Artificial Intelligence.

    The High-Level Advisory Body on AI released its recommendations last week, which include bridging the AI divide through a Global Fund on AI for the SDGs, and an AI Capacity Development Network to boost AI expertise in developing countries.

    We must keep working to ensure AI serves everyone, leaving no one behind and it will not be another factor to increase inequalities in the world. 

    Ministers, Ladies and Gentlemen,

    Across a very full agenda, the G77 and China are crucial to building a more just, inclusive and prosperous world.  

    The G77 was vital in the adoption of the conclusions of the Summit of the Future but its implementation will not be easy.  There will be a lot of resistance.  The G77 must be an engine to make sure that what we have achieved in the Summit will be translated in effective realities to the benefit of developing countries. 

    You can count on me in that essential cause.

    Thank you.
     

    MIL OSI United Nations News –

  • MIL-OSI USA: Scalise Sends Letter to Colleagues Touting Republican Wins in 118th Congress

    Source: United States House of Representatives – Congressman Steve Scalise (1st District of Louisiana)

    WASHINGTON, D.C.— Today, House Majority Leader Steve Scalise (R-La.) sent the following letter to his colleagues as we head into the October district work period:

    Dear Colleagues,
     
    It’s hard to believe, but only two years ago the Democrats were signing their deceptively named “Inflation Reduction Act” into law. That capped four years of unified Democrat control of Washington, where they jammed their radical agenda through Congress, spending $10 trillion and causing runaway inflation the American people still struggle with today.
     
    Thankfully, in November 2022, the American people had enough of the destruction caused by the Democrats’ radical agenda and voted us into a narrow House majority. House Republicans were a small beacon of hope in an otherwise desolate Washington landscape controlled by the Democrat Party, their army of bureaucrats, and a media propaganda machine.
     
    It’s been a David versus Goliath fight over the last 21 months of our House majority, and I’m so proud to fight alongside all of you. As we head into the final stretch before this pivotal election, we have a lot to be proud of and important accomplishments we can talk about at home.
     
    While we do not control the Senate or White House, we should be encouraged by the fact that we, as House Republicans, unified around an ambitious agenda that addressed the real concerns American families face every day. From inflation and energy costs to historic illegal immigration and crime to national security and holding those in power accountable, we put on full display the contrast of our vision for the country versus the vision of chaos and economic distress of radical Democrats. Here are some of the highlights:
     
    H.R. 1, the     Lower Energy Costs Act:
    Our conference fought back against the Biden-Harris Administration’s war on American energy by passing the     Lower Energy Costs Act to cut burdensome red tape and boost energy production here at home, instead of relying on hostile foreign dictators that put our energy security at risk. In addition to making America energy independent again, H.R. 1 lowers costs for families who are struggling every day thanks to skyrocketing prices at the gas pump, in the grocery store, and elsewhere.
     
    H.R. 2, the     Secure the Border Act:
    It’s no secret that, even in larger Republican majorities, we have historically struggled to unify around one comprehensive border bill. It was an uphill battle that required painstaking deliberations with all members of our diverse conference. The result was the most comprehensive border security bill in history, H.R. 2, the     Secure the Border Act, to address the worst border crisis in history. Over 8.2 million illegal immigrants have entered the U.S. and more than 2 million gotaways under President Biden and “Border Czar” V.P. Harris’ open border policies, which cost American lives every day, like Laken Riley, Jocelyn Nungaray, and Rachel Morin. H.R. 2 increases the number of border patrol agents, resumes construction of the border wall, ends catch-and-release, reinstates ‘Remain in Mexico’, cracks down on the flow of fentanyl, and keeps our communities safe.
     
    H.R. 5, the     Parents Bill of Rights:
     When the Administration and school boards tried to silence parents and remove them from their child’s education while using taxpayer dollars to promote woke agendas in classrooms, House Republicans stood up for parents’ right to be involved in their child’s education by passing H.R. 5, the     Parents Bill of Rights Act. Parents have the right to transparency when it comes to their child’s education, to know how their taxpayer dollars are being used by schools, and to express their concerns to school boards without being silenced by the federal government.
     
    H.R. 7521, the     Protecting Americans from Foreign Adversary Controlled Applications Act:
    TikTok, which is controlled by ByteDance and tied to the Chinese Communist Party, poses a significant national security threat to the United States by allowing the CCP to spy on Americans and dictate what we see. House Republicans passed H.R. 7521, the     Protecting Americans from Foreign Adversary Controlled Applications Act, and placed the choice in TikTok’s hands: either they can sever their ties with the CCP or no longer be available in the United States. The Senate and President Biden followed our lead, signing our TikTok bill into law.
     
    Standing with Our Ally Israel:
    After the horrific attack of October 7th, House Republicans stood by our commitment to provide Israel with the tools it needs to defend itself and defeat terror. We passed H.R. 6126, the     Israel Security Supplemental Appropriations Act, to quickly provide additional military equipment for our ally Israel, and in the face of Biden-Harris Administration efforts to pressure Israel by withholding critical weapons, we passed H.R. 8369, the Israel Security Assistance Support Act, to force the delivery of congressionally approved military aid. We have also taken on Iran and its terrorist proxies like Hezbollah, Hamas, and the Houthis through legislation like H.R. 5961, the No Funds for Iranian Terrorism Act, to freeze the Biden-Harris Administration’s $6 billion payday for Iran, H.R. 6046, the Standing Against Houthi Aggression Act, and H.R. 340, the Hamas International Financing Prevention Act.
     
    Taking on the Chinese Communist Party:
    The Chinese Communist Party (CCP) poses a generational threat to America, and dealing with it requires working across committee jurisdictions to develop a comprehensive approach. Since beginning this Congress with the establishment of the China Select Committee, that is exactly what we have done, culminating in this month’s China Week. We passed H.R. 9456, the     Protecting American Agriculture from Foreign Adversaries Act, to prevent foreign adversaries from gaining control of our American farmland, H.R. 1398, the Protect America’s Innovation and Economic Security from CCP Act, to defend American research and intellectual property, and H.R. 8333, the BIOSECURE Act, to kick the CCP out of our biotechnology supply chains, among many other strong bills.
     
    H.R. 277, the     REINS Act of 2023:
    Under the Biden-Harris Administration, federal agencies continue to expand their authority by assuming the powers of the legislative and judicial branches, allowing unelected and unaccountable bureaucrats to make laws behind closed doors that will have serious impacts on the American way-of-life. House Republicans stepped up to rein in executive overreach by passing H.R. 277, the     REINS Act of 2023, which requires congressional approval before major rules can take effect. 
      
    Ending the COVID National and Public Health Emergencies:
    Long after schools reopened and the majority of workers returned to the office, President Biden delayed terminating the COVID-19 national and public health emergencies because he didn’t want to give up the powers it gave his Administration. The National Emergencies Act was never intended to give the president unlimited authority over the American people’s lives – we passed H.J. Res. 7 and H.R. 382, the     Pandemic is Over Act, to end the COVID national and public health emergencies and get America back to normal.
     
    H.R. 8281, the     SAVE Act:
    With the over 8.2 million illegal immigrants that have come across our southern border thanks to President Biden and Vice President Harris’ open border policies, it is vital we shore up our election security and ensure that only American citizens are voting in American elections. House Republicans came together in strong support of H.R. 8281, the     SAVE Act
    , which would require individuals to provide proof of citizenship when registering to vote in federal elections.
     
    H.J. Res 26:
    Last year, Washington, D.C. tried to implement Democrats’ soft-on-crime policies, including weakening criminal penalties for violent offenses, such as carjacking, robberies, and burglary. To keep our nation’s capital safe, House Republicans passed H.J. Res. 29 to reverse the D.C. Council’s misguided crime bill, which all present Republicans voted for and more than 170 Democrats voted against. Thanks to our work in forcing this issue, President Biden eventually caved, and the measure passed the Senate and was signed into law.
     
    H.R. 7024, the     Tax Relief for American Families and Workers Act of 2024:
    In 2017, under President Trump’s leadership, Republicans passed the     Tax Cuts and Jobs Act, a pro-family, pro-worker, and pro-growth tax reform package. Because of constraints associated with reconciliation, some temporary provisions of TCJA have begun to expire, and substantially more will expire at the end of 2025. House Republicans are working to support American families and the economy by extending expiring provisions of TCJA. This Congress, we passed H.R. 7024, the Tax Relief for American Families and Workers Act of 2024, which allows working families to keep more of their paycheck and also restores important tax incentivizes that drive investment in the American economy.
     
    Digital Assets:
    Despite hostility from the Biden-Harris Administration, the digital asset ecosystem continues to grow. To foster continued growth by providing regulatory certainty and appropriate consumer protections, House Republicans passed three trailblazing bills in the digital asset space: H.J. Res. 109, a congressional resolution of disapproval against the SEC’s misguided “Staff Accounting Bulletin No. 121”; H.R. 4763, the     Financial Innovation and Technology for the 21st Century Act; and, H.R. 5403, the CBDC Anti-Surveillance State Act. Taken together, these bills set a clear path for the future of digital assets and their regulation.
     
    H.R. 26, the     Born-Alive Abortion Survivors Protection Act:
    To protect the sanctity of life, House Republicans passed H.R. 26, the     Born-Alive Abortion Survivors Protection Act, which secures medical protections for babies that survive an attempted abortion. This comes after four years of Democrats refusing to hold a vote on the life-saving legislation. Newborn babies deserve protection and care regardless of the circumstances under which they are born – this should not be a partisan issue, but common sense and basic morality.
     
    Attempted Assassinations of President Trump:
    The House quickly acted after the attempted assassination of President Donald Trump on July 13th in Butler, Pennsylvania, and formed a task force to investigate the series of failures by the U.S. Secret Service that day. The Task Force is also investigating the subsequent assassination attempt that occurred on September 15th in Florida, as it works to deliver answers to the American people and ensure their choice of president is never again threatened by a deranged, radical individual.
     
    Antisemitism on Campuses:
    After Hamas’ horrific October 7th attacks on Israel, and the subsequent military actions taken by Israel to defend itself, the U.S. has seen a disturbing uptick in antisemitism on college campuses. Led by the Committee on Education and the Workforce, House Republicans discovered a troubling culture on campuses, where administrators fail to implement protections for Jewish students and even mock Jewish students, and has demanded answers from these universities about student safety and funding of pro-Hamas groups and propaganda. As a result, the presidents of Harvard, the University of Pennsylvania, and Columbia resigned in disgrace.
     
    The Biden-Harris Border Crisis Report:
    The Committee on Homeland Security released a report exposing the many ways the Biden-Harris Administration knowingly and intentionally undermined U.S. border security to create the crisis we currently see at the border. The report revealed that even before taking office, the Administration was warned by experienced border security professionals about the dangers of their plan to open our borders and dismantle our border security. The Biden-Harris border crisis was not some inevitable phenomenon – it was directly caused by the actions taken by President Biden, Vice President Harris, and Homeland Security Secretary Mayorkas. Earlier this year, House Republicans impeached Homeland Security Secretary Alejandro Mayorkas for violating border security laws enacted by Congress and threatening the safety of the American people – unfortunately, Senate Democrats refuse to hold him accountable for his failures.
     
    The Biden-Harris Failed Afghanistan Withdrawal Report:
    The Foreign Affairs Committee’s investigation into the Biden-Harris Administration’s catastrophic withdrawal from Afghanistan revealed that the Administration disregarded the advice of military and security professionals, ignored the facts on the ground, and indulged in wishful thinking and endless deliberation that left American troops and diplomats in-country dangerously exposed – ultimately resulting in the tragic and unnecessary deaths of 13 U.S. servicemembers. This week, House Republicans passed legislation to condemn key figures and officials in the Administration, including President Biden, Vice President Harris, National Security Advisor Jake Sullivan, National Security Communications Advisor John Kirby, State Department Secretary Antony Blinken, and others, for their part in this historic disaster.
     
    President Biden’s Influence Peddling and Classified Documents:
    On December 13, 2023, the House voted to formalize the impeachment inquiry into President Biden allowing the Oversight, Judiciary, and Ways and Means Committees to continue developing compelling evidence revealing how President Biden knew, was involved, and benefited directly from his family’s influence peddling schemes. The committees took key actions to bring in significant witnesses, including Hunter Biden and James Biden, both of whom had lied during their appearances, and the committees sent criminal referrals to the Department of Justice recommending they be charged with making false statements.
     
    In February, the House Oversight and Judiciary Committees subpoenaed Attorney General Merrick Garland for records, including transcripts, notes, video, and audio files, related to Special Counsel Robert Hur’s investigation of President Biden’s willful mishandling of classified information, after Hur declined to recommend charges against Biden citing his memory problems. A.G. Garland refused to produce the audio recordings of Special Counsel Hur’s interviews with President Biden and his ghostwriter, and on June 12, 2024, House Republicans voted to hold A.G. Garland in contempt for failing to comply with the subpoena. On July 2, 2024, the House Judiciary Committee filed a lawsuit in D.C. federal court to obtain these recordings. We remain committed to obtaining this critically important evidence in our investigation into Biden’s mishandling of classified documents.
     
    Regulatory Burdens:
    In the wake of the Supreme Court overruling     Chevron, to assure the Biden-Harris Administration respects the limits placed on its authority, our House committees sent oversight letters to nearly every agency in the Executive branch requesting information on legislative rules, agency adjudications, enforcement actions, and agency guidance documents. Additionally, the House Oversight Committee issued a thorough report on the Biden-Harris Administration’s regulatory overreach
    , concluding that it has imposed an estimated $1.7 trillion in regulatory costs, with EPA counting for $1.3 trillion.
     
    This Congress hasn’t been easy, but nothing worth fighting for is. The future of our country is at stake, and it is critical that we make our case across the country of what we’ve accomplished so far and how much more we have left to do to save our country from the chaos and destruction that we have seen under the Biden-Harris Administration and their far-left partners in Congress. We are a team, and I am proud of all of you for the work you have done to help us keep our promises and unite to fulfill the agenda we set out to achieve on behalf of the American people. It’s an honor to serve as your Majority Leader.
     
    -Steve

    MIL OSI USA News –

  • MIL-OSI Global: US home insurance rates are rising fast – hurricanes and wildfires play a big role, but there’s more to it

    Source: The Conversation – USA – By Andrew J. Hoffman, Professor of Management & Organizations, Environment & Sustainability, and Sustainable Enterprise, University of Michigan

    The U.S. has seen a large number of billion-dollar disasters in recent years. AP Photo/Mark Zaleski

    Millions of Americans have been watching with growing alarm as their homeowners insurance premiums rise and their coverage shrinks. Nationwide, premiums rose 34% between 2017 and 2023, and they continued to rise in 2024 across much of the country.

    To add insult to injury, those rates go even higher if you make a claim – as much as 25% if you claim a total loss of your home.

    Why is this happening?

    There are a few reasons, but a common thread: Climate change is fueling more severe weather, and insurers are responding to rising damage claims. The losses are exacerbated by more frequent extreme weather disasters striking densely populated areas, rising construction costs and homeowners experiencing damage that was once more rare.

    Hurricane Ian, supercharged by warm water in the Gulf of Mexico, hit Florida as a Category 4 hurricane in October 2022 and caused an estimated $112.9 billion in damage.
    Ricardo Arduengo/AFP via Getty Images

    Parts of the U.S. have been seeing larger and more damaging hail, higher storm surges, massive and widespread wildfires, and heat waves that kink metal and buckle asphalt. In Houston, what used to be a 100-year disaster, such as Hurricane Harvey in 2017, is now a 1-in-23-years event, estimates by risk assessors at First Street Foundation suggest. In addition, more people are moving into coastal and wildland areas at risk from storms and wildfires.

    Just a decade ago, few insurance companies had a comprehensive strategy for addressing climate risk as a core business issue. Today, insurance companies have no choice but to factor climate change into their policy models.

    Rising damage costs, higher premiums

    There’s a saying that to get someone to pay attention to climate change, put a price on it. Rising insurance costs are doing just that.

    Increasing global temperatures lead to more extreme weather, and that means insurance companies have had to make higher payouts. In turn, they have been raising their prices and changing their coverage in order to remain solvent. That raises the costs for homeowners and for everyone else.

    The importance of insurance to the economy cannot be understated. You generally cannot get a mortgage or even drive a car, build an office building or enter into contracts without insurance to protect against the inherent risks. Because insurance is so tightly woven into economies, state agencies review insurance companies’ proposals to increase premiums or reduce coverage.

    The insurance companies are not making political statements with the increases. They are looking at the numbers, calculating risk and pricing it accordingly. And the numbers are concerning.

    The arithmetic of climate risk

    Insurance companies use data from past disasters and complex models to calculate expected future payouts. Then they price their policies to cover those expected costs. In doing so, they have to balance three concerns: keeping rates low enough to remain competitive, setting rates high enough to cover payouts and not running afoul of insurance regulators.

    But climate change is disrupting those risk models. As global temperatures rise, driven by greenhouse gases from fossil fuel use and other human activities, past is no longer prologue: What happened over the past 10 to 20 years is less predictive of what will happen in the next 10 to 20 years.

    The number of billion-dollar disasters in the U.S. each year offers a clear example. The average rose from 3.3 per year in the 1980s to 18.3 per year in the 10-year period ending in 2024, with all years adjusted for inflation.

    With that more than fivefold increase in billion-dollar disasters came rising insurance costs in the Southeast because of hurricanes and extreme rainfall, in the West because of wildfires, and in the Midwest because of wind, hail and flood damage.

    Hurricanes tend to be the most damaging single events. They caused more than US$692 billion in property damage in the U.S. between 2014 and 2023. But severe hail and windstorms, including tornadoes, are also costly; together, those on the billion-dollar disaster list did more than $246 billion in property damage over the same period.

    As insurance companies adjust to the uncertainty, they may run a loss in one segment, such as homeowners insurance, but recoup their losses in other segments, such as auto or commercial insurance. But that cannot be sustained over the long term, and companies can be caught by unexpected events. California’s unprecedented wildfires in 2017 and 2018 wiped out nearly 25 years’ worth of profits for insurance companies in that state.

    To balance their risk, insurance companies often turn to reinsurance companies; in effect, insurance companies that insure insurance companies. But reinsurers have also been raising their prices to cover their costs. Property reinsurance alone increased by 35% in 2023. Insurers are passing those costs to their policyholders.

    What this means for your homeowners policy

    Not only are homeowners insurance premiums going up, coverage is shrinking. In some cases, insurers are reducing or dropping coverage for items such as metal trim, doors and roof repair, increasing deductibles for risks such as hail and fire damage, or refusing to pay full replacement costs for things such as older roofs.

    Some insurances companies are simply withdrawing from markets altogether, canceling existing policies or refusing to write new ones when risks become too uncertain or regulators do not approve their rate increases to cover costs. In recent years, State Farm and Allstate pulled back from California’s homeowner market, and Farmers, Progressive and AAA pulled back from the Florida market, which is seeing some of the highest insurance rates in the country.

    In some cases, insurers are restricting coverage. Roof repairs, like these in Fort Myers Beach, Fla., after Hurricane Ian, can be expensive and widespread after windstorms.
    Joe Raedle/Getty Images

    State-run “insurers of last resort,” which can provide coverage for people who can’t get coverage from private companies, are struggling too. Taxpayers in states such as California and Florida have been forced to bail out their state insurers. And the National Flood Insurance Program has raised its premiums, leading 10 states to sue to stop them.

    About 7.4% of U.S. homeowners have given up on insurance altogether, leaving an estimated $1.6 trillion in property value at risk, including in high-risk states such as Florida.

    No, insurance costs aren’t done rising

    According to NOAA data, 2023 was the hottest year on record “by far.” And 2024 could be even hotter. This general warming trend and the rise in extreme weather is expected to continue until greenhouse gas concentrations in the atmosphere are abated.

    In the face of such worrying analyses, U.S. homeowners insurance will continue to get more expensive and cover less. And yet, Jacques de Vaucleroy, chairman of the board of reinsurance giant Swiss Re, believes U.S. insurance is still priced too low to fully cover the risk from climate change.

    Climate change is a major factor in the rising cost of insurance. Join us for a special free webinar with experts Andrew Hoffman of the University of Michigan and Melanie Gall of Arizona State University to discuss the arithmetic behind these rising rates, what climate change has to do with it, and what may be coming in your future insurance bills.

    Wednesday, October 9, 2024, 11:30 a.m. PT/2:30 p.m. ET.
    Register for the webinar here.

    Andrew J. Hoffman does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

    – ref. US home insurance rates are rising fast – hurricanes and wildfires play a big role, but there’s more to it – https://theconversation.com/us-home-insurance-rates-are-rising-fast-hurricanes-and-wildfires-play-a-big-role-but-theres-more-to-it-238939

    MIL OSI – Global Reports –

  • MIL-OSI Asia-Pac: Speech by FS at Hong Kong Association Luncheon in London (English only)

    Source: Hong Kong Government special administrative region

         Following is the speech by the Financial Secretary, Mr Paul Chan, at the Hong Kong Association Luncheon in London, the United Kingdom, today (September 27, London time):
     
    Adrian (Chairman of the Hong Kong Association, Mr Adrian Cartwright), members of the Hong Kong Association, ladies and gentlemen, friends of Hong Kong all,

         Good afternoon. I’m delighted to join you, once again, over a welcome lunch.

         The one consistent theme of my trip, first to Spain, now in London, has been the many speaking occasions.
     
         Last night’s Hong Kong Dinner was truly splendid and savory, and now I’m pleased to speak to the Hong Kong Association -thank you for the privilege – because you are very much invested in Hong Kong.
     
         I’m always pleased to speak at such times, especially when the topic is Hong Kong, and particularly to an audience as invested in Hong Kong as you are.

    The state of Hong Kong’s economy
     
         I have much to share, but let me start with a quick update on Hong Kong’s economy. 

         â€‹Last year, our GDP grew by 3.3 per cent as we recovered from the pandemic, and we achieved 3 per cent growth in the first half of this year. 

         The three main drivers fueling our economic growth are: exports, investments, and private consumption. Goods exports have seen significant growth, with Hong Kong serving as a major re-export hub for the Mainland, rising by over 7 per cent in the first half of the year. 

         â€‹For exports of services, tourism remains a key component. It is steadily recovering, with around 30 million visitors in the first eight months of this year, an increase of 44 per cent compared to last year. We expect 46 million visitors for the whole of 2024. 

         With improving economic and business prospects, but amid complex external environment, investment, from both the public and private sectors, expanded by more than 3 per cent in the first half of this year. 

         â€‹Private consumption has been bumpy. It is challenging given changes to the spending patterns of tourists and our residents. 

         Our stock market remains one of Asia’s leading exchanges, with a capitalisation in excess of 3 trillion pounds – 11 times our GDP. The measures announced, earlier this week by the Central Authorities to cut rates, reduce reserve requirement ratios and provide more support to the property sector – is boosting market confidence. The effects are already visible on Hong Kong’s stock market, with record high transactions! Before that, the China Securities Regulatory Commission announced measures in April 2024 that would encourage leading Mainland enterprises to list in Hong Kong. 

         Residential property market prices have fallen by over 6 per cent from the end of last year to August this year – and more than 25 per cent compared to its peak in September 2021. We know property market is an important pillar to any economy, so we remain vigilant, and has been monitoring the market closely. So far, our assessment is that it has been an orderly adjustment. 

         This February, we removed all the demand-side management measures for the residential property market. Overall, the property market is now stabilising. 

         The commencement of the monetary easing cycle by the Federal Reserve will provide support to both the economy and the property sector. 
         
         Currently, inflation is at around 1 per cent, and unemployment is lying low, at just 3 per cent. 

         â€‹Overall, we expect Hong Kong to grow between 2.5 per cent to 3.5 per cent this year. 

         Looking into the future, our economic development will be heading in eight discrete directions: internationally, as finance, trade, shipping, aviation and innovation and technology centres; and, regionally, as Asia Pacific’s legal and dispute resolution centre and intellectual property trading centre. We are committed, too, to becoming the East-meets-West centre for international cultural exchange. 

         Allow me now to highlight two of them: financial services and innovation and technology. 

         Let me start with financial services. Besides traditional areas that we are good at, we are working to become an international green finance and green technology hub. 

    Green and Sustainable Finance
     
         Green transition is a global agenda, bringing along responsibilities and opportunities. 
         â€‹
         Hong Kong has established a clear roadmap to achieve carbon neutrality by 2050, while reducing emissions by 50 per cent by 2035 from our 2005 levels. 

         â€‹We are taking a multi-pronged approach to realise this goal by addressing emission sources: first, achieving net-zero electricity generation by phases; second, enhancing energy efficiency in buildings through the promotion of green building practices; third, promoting green transport, particularly electric vehicles; and fourth, reducing waste. 

         Indeed, the Hong Kong SAR Government (Hong Kong Special Administrative Region Government) will invest more than 20 billion pounds in the next 15 to 20 years to implement climate change mitigation and adaptation measures. 

         However, the International Energy Agency has projected that the global energy transition finance gap will reach $3 trillion a year by 2030 and rise to $4.5 trillion a year by 2040. 

         â€‹Hong Kong is Asia’s No. 1 for green finance: for instance, we issue, over the past three years, 48 billion pounds of green bonds and debts per year on average, accounting for one-third of Asia’s market. But there is much more that we can achieve. 

         One is on green standards. Earlier this year, the Hong Kong Monetary Authority released the Hong Kong Green Taxonomy (Hong Kong Taxonomy for Sustainable Finance), which is compatible with the Common Ground Taxonomy developed by China and the EU (European Union), to assist the financial sector in assessing the “greenness” of projects. 

         Similarly, the Hong Kong Stock Exchange also impose ESG (environmental, social and governance) disclosure requirements for listed entities. 

         â€‹Just a few days ago, the Hong Kong Institute of Certified Public Accountants released the draft financial reporting standards which it plans to implement in August next year. The proposed Hong Kong standards follow those issued by the International Sustainability Standards Board, ISSB. 

         In the realm of green tech, start-ups are a powerhouse for many green innovative solutions, fully reflecting our younger generation’s passion for the environment and a sustainable future. 

         You might have met the delegation of start-ups from the Hong Kong Science Park and Cyberport who are with me on this trip to the United Kingdom. Some of them are engaged in green tech, and while others are engaged in different fields, but they share a common goal: to change people’s lives for the better. 

         We are working to attract more green start-ups in our innovation ecosystem. 

         By the way, our Science Park annually organises an elevator pitch competition where the start-ups have to sell their ideas in just 60 seconds in the lift of Hong Kong’s tallest skyscraper. The winner this year is from Munich seeking to establish a lithium battery recycle plant. 
     
    Innovation and Technology
     
         Let me now turn to innovation and technology. Our focus areas are: AI and big data analytics, biotech and health sciences, fintech and new energy and new materials. 

         The key success factor for the development of AI are algorithms, computing capabilities, data and use case scenarios. Under the “one country, two systems” arrangements, Hong Kong has unique advantages because we are the hub converging the Mainland and international data, and the Greater Bay Area provides us with ample use case scenarios. 

         In order to expedite the development of the eco-system of the aforementioned industries, we have set up the Hong Kong Investment Corporation, HKIC. 

         With six billion pounds at its disposal, the HKIC has a dual mandate. While it seeks financial returns, it also promotes the development of target industries that are crucial for the long-term competitiveness and economic vitality of Hong Kong. The HKIC serves as a tool for the Hong Kong SAR Government to invest and/or co-invest in enterprises, start-ups and important projects. 

         The ​HKIC is “patient capital”. It has already initiated several strategic partnerships in the areas of hard tech, biotech and new energy. 

         What distinguishes the HKIC from other sovereign funds is its investment approach to channel private capital into strategic industries through a collaborative approach, by bringing together like-minded private equity funds, venture capitalists, investors, and even entrepreneurs.

         This is particularly important for start-ups, especially those with original and disruptive technologies because their development cycles are often long, and patient capital is crucial for their success.

         Going forward, the HKIC will expand its collaboration with overseas partners to maximise impact. Next January, the HKIC will host a Roundtable for International Sovereign Wealth Funds, inviting sovereign wealth funds and financial leaders to explore investment opportunities and develop collaborative partnerships. In fact, this September, the HKIC also staged a Hong Kong Start-up Investment and Development Summit. 

         Ladies and gentlemen, I hope to leave ample time for questions, so I will conclude my remarks here. My sincere thanks, once again, to the Hong Kong Association for this welcome opportunity to speak to you. 

         I’m happy now to take your questions. 

         â€‹Thank you.

    MIL OSI Asia Pacific News –

  • MIL-OSI USA: Warren, Whitehouse, Casar, Lawmakers Slam 35 Companies for Paying Their Executives More Than They Pay in Federal Income Taxes

    US Senate News:

    Source: United States Senator for Massachusetts – Elizabeth Warren
    September 27, 2024
    Text of Letters (PDF)
    Washington, D.C. – U.S. Senators Elizabeth Warren (D-Mass.) and Sheldon Whitehouse (D-R.I.), and Representative Greg Casar (D-Texas) led their colleagues in slamming 35 major companies that have been paying their executives more than they pay in federal income taxes. The lawmakers point to this as an additional reason why Congress must reform the tax code in 2025 to ensure that big corporations are paying what they owe.
    “For decades, big businesses and the wealthy have skirted their responsibility to pay federal income taxes, leaving hardworking Americans to foot the bill,” wrote the lawmakers. “As Congress considers what to do when some provisions of the 2017 law expire next year, it is critical that we ensure that large, profitable businesses are paying their fair share.” 
    In the first five years following the $2 trillion Tax Cuts and Jobs Act (TCJA) passed by Republicans and signed by President Trump in 2017, 35 companies raked in $277 billion in domestic profits. These companies then paid an average effective income tax rate of just 14.1 percent, almost a third less than the 21 percent statutory rate. Instead of these gains “trickling down” to workers, the corporations paid their executives $9.5 billion – more than they paid in federal income taxes. While executives were making $989,000 per year or more, an average raise of $50,000 per executive, 90 percent of workers saw no earnings increase.
    The most egregious examples of these companies – and the ones the lawmakers wrote to – include: Tesla, TMobile, Netflix, AIG, Ford, NextEra, Darden, MetLife, Duke Energy, First Energy, DISH, Principal Financial, American Electrical Power, Kinder Morgan, Dominion, Oneok, Williams, Xcel Energy, NRG Energy, Salesforce, DTE Energy, Ameren, Sempra Energy, US Steel, Entergy, AmerisourceBergen, PPL, CMS Energy, Evergy, Voya Financial, Atmos Energy, Alliant Energy, Match Group, UGI, and Agilent Tech.
    “Next year, Congress has an opportunity to take bigger strides in reforming our tax code – to raise the corporate rate, close loopholes, and hold big businesses to the same standards as everyday working Americans who pay their fair share,” concluded the lawmakers.
    In addition to Senators Warren and Whitehouse, and Representative Casar, the letters were also signed by Senators Jeff Merkley (D-Ore.), Ed Markey (D-Mass.), Bernie Sanders (I-Vt.), and Peter Welch (D-Vermont), as well as Representatives Jan Schakowsky (D-Ill.), Eleanor Norton (D-D.C.), Mark Pocan (D-Wis.), Pramila Jayapal (D-Wash.), Hank Johnson (D-Ga.), Rashida Tlaib (D-Mich.), Bennie Thompson (D-Miss.), Delia Ramirez (D-Ill.), and Barbara Lee (D-Calif.). 
    Senator Warren has led the fight to close tax loopholes for the wealthy and giant corporations to ensure a more fair tax system: 
    In July 2024, Senator Warren called on Treasury Secretary Janet Yellen to fully implement the 15% Corporate Alternative Minimum Tax signed into law by President Biden in the Inflation Reduction Act two years ago to preemptively stop corporate attempts to avoid paying their fair share.
    In June 2024, Senator Warren delivered remarks at the Washington Center for Equitable Growth to set the agenda on taxes ahead of the 2025 tax fight and urge Democrats to back President Biden’s agenda to tax the rich. Senator Warren’s call came as Congress prepared for major tax policy changes as a large portion of the 2017 Republican tax cuts for the wealthy were set to expire. 
    In March 2024, Senator Warren, along with U.S. Representatives Pramila Jayapal (D-Wash.) and Brendan Boyle (D-Pa.), reintroduced the Ultra-Millionaire Tax Act, popular, comprehensive legislation that would bring in at least $3 trillion in revenue over 10 years by requiring that the top 0.05 percent of American households chip in 2 cents for every dollar of wealth over $50 million. The newly introduced version of the bill included stronger rules on trusts, a common method the ultra-wealthy utilize to avoid paying taxes that cost the federal government between $5 and $7 billion annually. 
    In November 2023, at a hearing of the Senate Finance Committee, Senator Warren called out efforts by lobbyists for giant corporations trying to extend three of the biggest corporate giveaways in the Trump tax cuts: bonus depreciation, R&D expensing, and looser limits on net interest deduction. 
    In October 2023, Senators Warren, Sheldon Whitehouse (D-R.I.), Chris Van Hollen (D-Md.), and Bernie Sanders (I-Vt.) sent a letter to Secretary Janet Yellen and Internal Revenue Service (IRS) Commissioner Daniel Werfel, urging them to proactively use the Treasury Department’s rulemaking authority to close tax loopholes that create inconsistency and unfairness in the tax system and threaten the government’s ability to raise important revenue.
    In August 2023, Senators Warren, Bob Casey (D-Pa.), Richard Blumenthal (D-Conn.), and Sanders sent a letter to the Treasury and IRS, urging them to quickly propose and implement strong rules that close loopholes exploited by crypto tax evaders.
    In April 2023, Senator Warren sent a letter to Secretary Yellen and Commissioner Werfel, urging them to follow through on the commitments of the Biden administration by examining and taking concrete steps to address racial inequities in tax benefits and enforcement.
    In March 2023, Senators Warren, Van Hollen, Sanders, and Whitehouse sent a letter to Treasury Secretary Janet Yellen, urging her to use the full extent of the Treasury Department’s regulatory authority to crack down on the ultra-wealthy’s use of trusts to dodge paying their fair share in taxes.

    MIL OSI USA News –