Economy

Net premiums written in the company’s general insurance business rose 5% on a constant currency basis in the April-June quarter to $6.9 billion, while underwriting income climbed 73%.That helped AIG – one of the world’s biggest commercial insurers – report adjusted after-tax income attributable to common shareholders of $1.19 per share. Analysts had expected a figure of $1.10 a share, according to Refinitiv IBES data. But the insurer’s consolidated net investment income fell 29% to $2.6 billion, partly hurt by weakness in alternative investments such as private equity.An unabating surge in inflation, rising interest rates and the toll of the Russia-Ukraine war have rattled financial markets this year, sapping the investment income that had powered insurers’ profits last year. AIG also blamed the market volatility for a delay in the initial public offering of its life and retirement unit.The unit – set to be renamed Corebridge Financial Inc when it goes public – had filed for its offering in March and planned to complete its listing by the end of June, subject to market conditions.”Completing the IPO is a significant priority for us and we remain ready to execute,” Chief Executive Officer Peter Zaffino said without giving a new deadline for the offering.AIG had first announced the move in 2020 and it sold a 9.9% stake in the unit to private equity firm Blackstone Group (NYSE:BX) Inc for $2.2 billion last year. More

Former chancellor Rishi Sunak, one of the contenders to be Britain’s next prime minister, has pledged fresh help for households struggling with the cost of living crisis, as his allies stepped up attacks on his rival Liz Truss.Dominic Raab, the justice secretary and a Sunak supporters, claimed if Truss, the foreign secretary, were to win the Conservative leadership contest and press ahead with an emergency tax-cutting Budget it would be an “electoral suicide note” for the Tories.This came after Boris Johnson rejected calls to draw up a rapid response to the cost of living crunch involving soaring energy bills during his final weeks as prime minister, with Downing Street insisting big fiscal decisions had to be taken by his successor.The CBI employers group joined calls by Gordon Brown, the former Labour prime minister, for Johnson to start work now on a package of measures to help the vulnerable.Sunak declined to provide details of how much new support he would provide to households as prime minister — suggesting he would first need to know the revised level of the UK energy price cap due to take effect this autumn.But he said: “This winter is going to be extremely tough for families up and down the country, and there is no doubt in my mind that more support will be needed . . . bills are going up by more than anyone expected and the next government will need to act.”The regulator Ofgem is due to provide details later this month of the revised energy price cap that will be implemented in October. It is predicted it will cap household fuel bills at well in excess of £3,000 per year, compared to £1,971 currently.

Sunak said he would keep any one-off borrowing needed to pay for fresh household support to a minimum by seeking “efficiency savings across Whitehall”.Truss told the Financial Times last week she favoured tax cuts over “handouts” as the best way to help households, saying she would look at “what more can be done”. She wants to scrap a rise in national insurance — introduced by Sunak while chancellor — in an emergency Budget earmarked for September.Raab, writing in The Times, said it was wrong to rule out further direct support for families. He said: “If we go to the country in September with an emergency Budget that fails to measure up to the task in hand, voters will not forgive us as they see their living standards eroded . . . such a failure will read unmistakenly to the public like an electoral suicide note and, as sure as night follows day, see our great party cast into the impotent oblivion of opposition.”Meanwhile Johnson, who returned to work on Monday after a holiday in Slovenia, has argued that he does not have the authority to draw up new policies, including any measures on the cost of living crisis, ahead of a handover of power to his successor due on September 5.“By convention it is not for this prime minister to make major fiscal interventions during this period,” said Downing Street. “It will be for a future prime minister.”Sunak and Truss have so far proposed limited measures to address the cost of living crunch.

Tony Danker, head of the CBI, said it was not good enough. “The economic situation people and businesses are facing requires all hands to the pump this summer,” he added. “We simply cannot afford a summer of government inactivity while the leadership contest plays out followed by a slow start from a new prime minister and cabinet.” Brown said the inflation crisis was causing poverty of the kind he had not expected to see again in his lifetime and urged Johnson to convene the government’s emergency Cobra committee to prepare a response.He told Sky News that charities were stocking up on duvets, sleeping bags, hot water bottles and blankets “because they know that people can’t afford to heat their homes any more”.Brown branded as “stupid” Sunak’s windfall tax on North Sea oil and gas companies — introduced to help fund the government’s latest support for households — because it contained generous allowances for investments, cutting its potential yield from £15bn to £5bn per year.Labour is expected to unveil a plan for helping households later this month. More

WASHINGTON (Reuters) -One of the two Republicans on the Federal Trade Commission (FTC) who has dissented in several antitrust actions filed against social media companies said on Monday that he will resign later this year.FTC Commissioner Noah Phillips said in a statement he had written to President Joe Biden announcing his intent to resign this fall. Phillips, a former chief counsel for Republican Senator John Cornyn, dissented in December 2020 in an FTC antitrust case filed against Facebook (NASDAQ:META), which is now known as Meta Platforms. He also dissented last month when the FTC sought a court order to block Meta from buying virtual reality (VR) content maker Within Unlimited.Democrats hold a 3-2 majority on the commission and only three can be from one political party. The FTC works with the Justice Department to enforce antitrust law and investigates allegations of deceptive behavior by companies.In April, Phillips said the Biden administration is “as hostile to mergers and acquisitions (M&A) as any in my lifetime.”He argued that since President Joe Biden took over antitrust enforcement “has been anything but vigorous—indeed, it has been sclerotic. By that I mean not just fewer cases being brought, but a longer process with fewer decisions being made.The White House has made fostering competition a top priority. National Economic Council director Brian Deese said last month Biden believes that “driving structural change to promote competition across the economy” will “generate more innovation, greater productivity, more opportunity in the country while lowering prices.”Phillips and fellow Republican FTC Commissioner Christine Wilson last year asked the White House to disclose any “evidence” of wrongdoing behind high retail gasoline prices after Biden urged the agency to dig deeper into possible “illegal conduct.” He said in January he had received no response. He said “an antitrust investigation predicated on fumes would have wasted resources.” More

WASHINGTON (Reuters) -The United States on Monday imposed sanctions on virtual currency mixer Tornado Cash, accusing it of helping hackers, including from North Korea, to launder proceeds from their cyber crimes.A senior Treasury Department official said Tornado Cash, one of the largest mixers identified as problematic by the Treasury, has reportedly laundered more than $7 billion worth of virtual currency since it was created in 2019.Monday’s move freezes any U.S. assets of the mixer and generally bars Americans from dealing with it.The Lazarus Group, a well-known North Korean government-backed hacking group that has conducted numerous data breaches, both politically and sometimes financially motivated, has laundered at least $455 million through Tornado Cash, the Treasury said. The Lazarus Group is already under U.S. sanctions. The group has conducted numerous significant data breaches historically, including an intrusion into Sony (NYSE:SONY) Pictures in late 2014. U.S. and South Korean officials say North Korea controls thousands of hackers that steal funds, including cryptocurrencies, to finance its weapons programs. Pyongyang has denied the accusations. Tornado Cash and the North Korean mission to the United Nations in New York did not immediately respond to requests for comment.Tornado Cash was also used to launder about $100 million from a hack into virtual currency firm Harmony in June and as recently as last week in the theft of Nomad, a virtual currency technology company, the Treasury said.Despite prior requests for Tornado Cash to make changes, the criminal activity continued, the Treasury official said, leading to the decision to designate the mixer.In May, the U.S. Treasury also targeted virtual currency mixer Blender, imposing sanctions for the first time on a mixer – a software tool that pools and scrambles cryptocurrencies from thousands of addresses.Hacks have long plagued crypto platforms. And experts say Tornado Cash has played a role in these crimes. “Tornado is a popular and important tool for cybercriminals and state-backed hacking groups,” said Dr Tom Robinson, cofounder of Elliptic, a cryptocurrency analytics firm. “In total, Elliptic’s analysis shows that at least $1.3 billion in proceeds of crime such as ransomware, hacks and fraud have been laundered through Tornado Cash.” More

WASHINGTON (Reuters) -Northrop Grumman is partnering with rocket startup Firefly Aerospace to build a new version of its workhorse Antares rocket without Russian-made engines that were cut off from the United States after the invasion of Ukraine, the company said on Monday.The new version of Antares, a rocket which NASA uses to ferry cargo to the International Space Station, will use seven Miranda engines under development by Firefly, Northrop (NYSE:NOC) said in a statement, adding that the two companies will later work on an entirely new launch vehicle.Northrop’s partnership with Firefly comes months after Russia halted deliveries of Antares’ original RD-181 engines in retaliation for sanctions the U.S. levied on Moscow over its Feb. 24 invasion of Ukraine. The delivery halt left Northrop with just two remaining Antares rockets despite several more under contract with NASA.The Antares rocket launches Northrop’s Cygnus cargo spacecraft to the space station. The company’s final launch using Russian engines is slated for early next year.A Northrop spokeswoman told Reuters that the company purchased three Falcon 9 launches from Elon Musk’s SpaceX to launch Cygnus capsules to the space station while Antares 330 is under development. Those Falcon 9 missions will launch in late 2023 and 2024.Northrop’s statement did not specify the value of the Firefly partnership or when it expects to launch the new Antares 330 rocket.”Through our collaboration, we will first develop a fully domestic version of our Antares rocket, the Antares 330, for Cygnus space station commercial resupply services, followed by an entirely new medium class launch vehicle,” Scott Lehr, vice president of Northrop’s launch and missile defense unit, said in a press release.A pair of RD-181 engines have long powered the Antares rocket. Northrop previously said it was exploring other rockets for Cygnus after Russia’s decision to cut off engine deliveries. More

WASHINGTON (Reuters) -The U.S. Securities and Exchange Commission (SEC) on Monday proposed new rules aimed at preventing conflicts of interest in management and governance of clearing houses.Clearing houses provide essential plumbing for financial markets, ensuring that securities or derivatives trades are completed, even if one side of a transaction goes bust.Under the SEC’s proposal, registered clearing houses would be required to disclose more details on board composition, independent directors, and nominating and risk management committees, among other details, the agency said.”I think these rules would help to build more transparent and reliable clearing houses, SEC Chair Gary Gensler said in a statement.”This in turn would help ensure our markets are more resilient, protecting investors and building trust in our markets,” Gensler said.The plan would replace two related measures proposed following the 2009-2010 global financial crisis, but which were never adopted.Specifically, the SEC’s plan would require clearing houses identify, mitigate or eliminate conflicts of interest involving directors or senior managers, and also to document such actions.It would also require such firms to implement policies and procedures that obligate directors to report conflicts of interest, among other details.The SEC’s move comes as part of efforts by the Biden administration to see all aspects of the financial industry boost environmental, social and governance disclosures. More

A New York Fed survey showed that respondents in July expected inflation to run at a 6.2% pace over the next year and a 3.2% rate for the next three years.
That marks a big drop-off from the respective 6.8% and 3.6% results from the June survey.
Expectations for food increases fell at the fastest rate in survey history and the second-fastest for gasoline prices.

Shoppers inside a grocery store in San Francisco, California, U.S., on Monday, May 2, 2022. 
David Paul Morris | Bloomberg | Getty Images

The consumer outlook for inflation decreased significantly in July amid a sharp drop in gas prices and a growing belief that the rapid surges in food and housing also would ebb in the future.
The New York Federal Reserve’s monthly Survey of Consumer Expectations showed that respondents expect inflation to run at a 6.2% pace over the next year and a 3.2% rate for the next three years.

While those numbers are still very high by historical standards, they mark a big drop-off from the respective 6.8% and 3.6% results from the June survey.
Through June, food prices rose 10.4% over the past year, according to the Bureau of Labor Statistics. They are still expected to climb 6.7% over the next 12 months, but that’s a decline from the June survey of 2.5 percentage points, the biggest fall in a data series going back to June 2013.

Likewise, respondents see gas prices, which rose 60% over the past year, increasing at just a 1.5% pace over the next year, a slide of 4.2 percentage points from June, the second-biggest monthly decline in the survey’s history.
The price of regular gas has come down about 67 cents a gallon over the past month though it remains 87 cents higher than a year ago, according to AAA. Commodity prices overall have been falling significantly as well.
Finally, home prices are expected to rise 3.5% from June’s 4.4%, the lowest projected gain since November 2020.

Five-year inflation expectations also slipped, dropping 0.5 percentage point to 2.3%.
The results come as the Fed has been raising interest rates aggressively to bring down inflation running at its highest level in more than 40 years. The central bank in 2022 has hiked benchmark rates four times for a total of 2.25 percentage points, and market pricing indicates a third consecutive 0.75 percentage point increase in September, according to CME Group data.
However, the New York Fed results from July might give policymakers reason to pull back if not in September then later in the year if the inflation data cooperates. The Fed targets inflation at 2% over the long run, so the projected levels in the survey remain well above the central bank’s comfort level.
Over the weekend, Fed Governor Michelle Bowman said she doesn’t expect inflation to come down anytime soon and sees a need to keep pushing rates higher. San Francisco Fed President Mary Daly echoed those sentiments, saying the increases are “far from done.”
Those comments came after the BLS on Friday reported much higher numbers for payroll growth — 528,000 — and wages, with average hourly earnings jumping 5.2%.
The New York Fed survey also showed that overall household spending growth for the next year is expected to cool to 6.9%. That’s also a comparatively high number over the longer run but well below the record-high 9% result from May. The 1.5 percentage point monthly decline is the largest in the survey’s history.
Consumers also grew slightly more optimistic on stock prices during a month that saw the S&P 500 soar 9%, with 34.3% now expecting higher prices over the next 12 months.

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BOGOTA (Reuters) -Colombia’s new leftist government on Monday formally proposed a tax reform bill to lawmakers which would raise some 25 trillion pesos ($5.76 billion) in 2023, equivalent to some 1.72% of gross domestic product, in an effort to increase revenue for anti-poverty programs.Finance Minister Jose Antonio Ocampo said the bill would eventually add some $11.53 billion annually to government coffers, with revenue gradually climbing as the legislation comes into force.The funds, raised by levying more charges on high-earning individuals and exports of coal and oil, will be directed toward an ambitious agenda of social programs — including anti-hunger efforts, free public universities, and aid for elderly people without pensions.”We’re seeking to contribute to equality and social justice with a more progressive tax system and also to assign the corresponding resources to government social programs and consolidate the fiscal adjustment that is clearly incomplete,” Ocampo told journalists.”Although there have been advances this year the fiscal deficit remains considerable.” The reform seeks to levy higher taxes on people who earn more than 10 million pesos (some $2,300) monthly – about 2% of Colombia’s population. It would instate a permanent wealth tax, and charge a duty on earnings from the sale of shares in companies listed on the stock exchange.The reform would also levy a 10% tax on exports of coal, oil and gold on income earned when each commodity exceeds a certain price threshold, Ocampo said.The threshold for oil would be $48 per barrel, while coal exports would see the duty levied when prices exceed $87 per tonne. The threshold for gold shipments would be $400 per troy ounce.The payment of royalties by commodity companies would no longer be deductible from their income tax payments under the bill, Ocampo added.Oil and coal are the country’s top exports and source of royalties. Colombian President Gustavo Petro has promised to bar all new oil development and move the country away from coal production.The country’s mining association said it would comment on the proposal later this week, while the head of the private oil producers’ association said it would analyze the bill.Petro’s promises worry some in the market, but Ocampo – a long-time official – has made efforts to assuage those fears, telling Reuters in an interview last week that he will “not do crazy things or allow crazy things.”The reform would also tax sugary drinks, highly-processed foods and single-use plastics.The bill should be presented with an urgency request by the ministry to facilitate its quick passage, said Senate President Roy Barreras, a member of Petro’s coalition. ($1 = 4,337.28 Colombian pesos) More