By Svea Herbst-Bayliss

NEW YORK (Reuters) – Dan Och and four other former executives of Sculptor Capital Management on Thursday pressed the hedge fund to release information about a more lucrative bid for the company which it rejected in favor of sticking by a deal with Rithm Capital.

Investors Boaz Weinstein, Bill Ackman, Marc Lasry and Jeff Yass – members of a group called Bidder J – offered to pay $12.76 per share for Sculptor, the hedge fund said on Wednesday. But Sculptor chose to stay with Rithm’s $11.15 per share bid, saying the Bidder J offer has “significantly less certainty of closing.”

But Och and the others want details.

“Many shareholders and investors are eager to hear more about such a bid, and we urge the Board to do its fiduciary duty and waive the NDAs (nondisclosure agreements) to maximize the bidding process and achieve the highest value for shareholders,” Och said in a statement.

The group’s call to release the other bidders from their nondisclosure agreements is the latest move in an increasingly tense battle between some of the hedge fund industry’s most storied managers over Sculptor, the firm Och founded and ran for years. Rithm agreed to buy Sculptor in July.

Och called Weinstein, Ackman, Lasry and Yass “some of the most acclaimed investors of the last 25 years” and said “it seems evident that such a group could augment Sculptor’s investment team while paying much more cash to the shareholders.”

A representative of Sculptor was not immediately available for comment.

(Reporting by Svea Herbst-Bayliss in New York; Editing by Matthew Lewis)

By Engen Tham, Julie Zhu and Clare Jim

SHANGHAI/HONG KONG – In the beginning, Hui Ka Yan followed a simple formula. Borrow to buy land. Sell homes on the site before they are built. Use the cash to pay lenders and finance the next real estate project.

For two decades, starting in the mid-1990s, this approach was enormously lucrative as Chinese home prices soared. It transformed Hui, a former steel industry employee from a rural village, into China’s richest man. And it turned his company, China Evergrande Group, into a vast real-estate empire.

But as Evergrande grew increasingly laden with debt, the company resorted to ever-more unorthodox strategies to generate funds.

By 2016, at least one Evergrande subsidiary was encouraging some staff to buy financial products from the group’s wealth-management unit, which helped fund property development, according to a former employee and a company document reviewed by Reuters. The former employee said some people were asked to spend up to half of their salaries on such products.

Hitting up employees for funds, Reuters has found, was just one of a number of unusual practices employed by the company before it came to the brink of a messy collapse in 2021 under the weight of hundreds of billions of dollars of debt. This account of the rise and fall of Hui and Evergrande is based on interviews with more than 20 people who have worked with the tycoon or at his company. All spoke on condition of anonymity.

Evergrande said Hui wasn’t available for an interview. Neither the founder nor the company responded to written requests for comment, including about whether employees were encouraged to purchase financial products, Hui’s management style, the company’s business practices and the challenges it faces.

Hui was an ambitious businessman who could be demanding with his staff, charismatic with creditors, and at times self-indulgent. He had a team of female personal assistants and at least some of them were hired primarily for their looks, according to four former employees and a person familiar with the company.

Evergrande’s story also reveals the inner workings of a Chinese property giant, from the heady days of rocketing real-estate prices to the precipitous decline of the company when incensed retail investors stormed its offices. The company’s arc also traces the fortunes of China’s broader property market, a key driver of growth of the world’s second-biggest economy – but is now an anchor tugging that economy down.

Companies accounting for 40% of Chinese home sales have defaulted since mid-2021, according to analyst estimates. Homes have been left unfinished. Suppliers haven’t been paid. And some of the millions of Chinese people who put their savings in property-linked wealth management products face the prospect of not getting their money back.

Evergrande’s properties were “sold as a speculative investment, not sold as a place to live,” said Anne Stevenson-Yang, managing principal at J Capital Research in the United States, which produces research and takes short investment positions, or bets on a stock’s decline. People purchase them because they think the value will appreciate “so obviously the confidence game will only work as long as people keep buying.”

Public confidence is drying up. China’s property market was shaken again in recent weeks when another major developer, called Country Garden, missed payments on two U.S. dollar bonds and sought to delay repayment on a private onshore bond.

Evergrande’s problems aren’t easing. The embattled developer has proposed restructuring terms for its offshore debt, and recently, it sought a U.S. court’s approval on the plan. Evergrande has said its proposed restructuring plan will alleviate its offshore debts and help the company to resume operations.

On Sunday, Evergrande reported losses of 33 billion yuan ($4.53 billion) for the first half of the year, versus a 66.4 billion yuan loss in the same period a year earlier. Evergrande’s shares fell 79% on Monday after resuming trading following a 17-month suspension, wiping out $2.2 billion of the company’s market value.

For 64-year-old Hui, the company’s decline has destroyed tens of billions of dollars of his personal net worth and necessitated the frenzied sale of corporate assets to help repay debt. The company faces a legal onslaught, too: Evergrande said there were more than 2,200 lawsuits totaling roughly 535 billion yuan ($73.40 billion) in potential liability as of June.

The Chinese property sector’s worsening debt crisis poses a significant challenge for President Xi Jinping and his policy makers, with the country’s economy already reeling from weaker domestic and overseas demand. China’s economic output grew at a frail pace in the second quarter.

Anxiety about contagion spreading to the country’s financial sector and the broader economy is weighing on global markets.

China’s State Council Information Office, which handles media queries on behalf of the government, declined to comment on the property market and Evergrande’s fate. The housing authority and the finance ministry didn’t respond to comment requests.

THE FOUNDATIONS

Hui was raised by his grandmother in a rural village in Henan province, according to a biography.

He founded Evergrande in 1996, as China was dismantling its system of state-provided housing and urbanizing fast. About a third of Chinese lived in cities then. Now, about two-thirds do.

Local authorities had an incentive to favor housing development by companies like Evergrande. Beijing significantly increased the share of taxes taken in by the central government in the mid-1990s. Local governments saw their share shrink, but they didn’t get a commensurate reduction in their responsibility to provide services. To replenish their coffers, local governments sold land to developers to raise revenues.

Hui tapped into this demand. He purchased the land for his first development project in 1996 for 5 million yuan, borrowing more than half the amount, according to the biography. He sold the first complex the following year for 80 million yuan, according to Evergrande’s website.

By 2009, Evergrande had expanded to more than 20 cities, according to the company.

When Hui listed Evergrande’s stock in Hong Kong in 2009, it raised the equivalent of $729 million. The deal made Hui, who then owned about two-thirds of the company, worth billions of dollars.

By 2013, Hui was riding high. He was elected a member of one of China’s most prestigious political bodies, the standing committee of the Chinese People’s Political Consultative Conference. That year, Guangzhou Evergrande, the soccer team the company had purchased control of three years earlier, won Asian soccer’s top club competition.

When in Hong Kong, he mixed with the city’s property tycoons, playing cards and cutting investment deals with them, according to three people with knowledge of the meetings. Hui ate at Hong Kong’s elite members-only Dynasty Club, dining on Chinese delicacies such as bird’s nest soup and shark fin soup, said the person familiar with the company.

While entertaining businessmen at a clubhouse at Evergrande’s Guangzhou offices during the boom years, Hui on at least two occasions threw cash for entertainment and watched while his female assistants scooped up the bills from the floor, said a person who used to work for him.

Hui and Evergrande didn’t respond to questions posed by Reuters about the founder’s lifestyle.

‘EVERYTHING WAS FROM THE TOP DOWN’

Even as Evergrande expanded, Hui remained involved at all levels.

He would approve all land acquisitions, said a former employee who worked in one of Evergrande’s regional offices. Hui helped craft advertising slogans, two of the people Reuters spoke to said. He was particular about fonts and font sizes, according to the person who used to work for him. And Hui asked staff to fine employees for minor infractions, according to the person who used to work for him and the person familiar with the company, including for things like not being appropriately dressed.

“Everything was from the top down. No one queried what Hui said,” said one former employee.

The corporate culture was reflected in a video of Hui playing in a company basketball match, which was uploaded to a sharing platform in April 2020. As Hui repeatedly shoots the ball, opposing players barely challenge him. Reuters wasn’t able to independently verify the footage.

For those who accepted Hui’s style, there was a clear upside: generous pay. The average salary at Evergrande was 15,666 yuan ($2,149.38) a month in 2018, according to employment data website Maimai.cn. That was about three times the monthly average in the real-estate sector, according to official data.

Some employees in Evergrande’s capital department pocketed lucrative bonuses for securing loans from banks or other lenders, with teams earning up to 1% of the amount borrowed, said a former employee and the person familiar with the company. The bonuses were then divided up among the team, the former employee said.

EMPLOYEE TARGETS FOR FINANCIAL PRODUCTS

In 2016, with China’s property prices on a tear, Evergrande overtook its main rival to become the nation’s number one developer by sales. The company’s land reserves reached 312 million square meters, double just two years earlier.

Evergrande’s share price in 2017 topped HK$30, more than seven times its 2009 initial public offering price. Hui became Asia’s richest man, with an estimated fortune of tens of billions of dollars at the time, according to Forbes magazine.

As Evergrande was gorging on land, it sought ways to help finance its deals. At its then internet unit, HengTen Networks, the company encouraged some employees to dip into their own pockets and buy the group’s wealth-management products.

The May 2016 document reviewed by Reuters lists more than a dozen people who are identified as not having fulfilled a quota for purchasing Evergrande financial products. A handwritten note on the document describes the situation as “serious” and says bonuses would be cut if these more than a dozen people didn’t meet their quotas.

Management did cut some bonuses as a result, said the former employee, who had worked at HengTen. The person familiar with the company, who spoke of Hui’s dining habits in Hong Kong, said targets for purchasing financial products were widespread at Evergrande and also said staff would be penalized for not meeting their quotas.

In a recent stock-exchange filing, Evergrande said it had raised about 92.1 billion yuan ($12.64 billion) from the sale of wealth management products over time, and that as of the end of 2022 there was about 34 billion yuan ($4.66 billion) unpaid principal and interest on such products.

While it’s common for Chinese developers to raise funds for property projects by selling wealth-management products, tying employee bonuses to the purchase of such products is unusual, two industry insiders said.

“You can look more profitable, but it’s an artificial boost,” said Kelly Richmond Pope, forensic accountant and professor at Chicago’s DePaul University.

Evergrande Wealth, a unit of Evergrande Group’s Evergrande Financial Holding Group, didn’t respond to requests for comment. China’s banking regulator also didn’t respond to requests for comment.

All the while, Hui was loading up the company with debt. It was around this time that the government began to publicly express concern about the scale of borrowing in the property sector.

When questioned by investors and reporters over the years about his highly leveraged projects, Hui responded that Evergrande’s high turnover and asset value were sufficient to cover its debts.

He would also publicly pay tribute to the ruling Communist Party. “Without the country’s good policy to reform and open up, Evergrande would not have what it has today,” Hui said in a 2018 speech at the China Charity Awards.

Hui, who had already expanded into other businesses ranging from plastic surgery to life insurance, continued to invest in new ventures. By 2019, he was making a foray into electric cars.

DEAD CARP

In early 2020, Hui publicly re-iterated a pledge to “significantly lower” his company’s debt. But keeping Evergrande afloat was about to get a lot more difficult.

Beijing now implemented strict new regulations aimed at restricting the financing of highly-leveraged developers. By 2021, Chinese property sales were starting to decline, and the government crackdown led to a series of defaults by developers, with many going out of business.

In a monthly meeting with staff in 2020, Hui rued the death of some of his Japanese koi carp, according to the person familiar with the company. Hui said the deaths were a harbinger of bad luck, the person said.

As banks and investors became more cautious about lending to property developers, Evergrande sought alternate – and pricier – sources of funding.

One place the company sought funds from was so-called trust firms, as Reuters reported in 2020. Dubbed “shadow banks,” because they operate outside many of the rules that govern commercial banks, trust firms were keen to capitalize on the needs of an industry eager for credit. And they could charge far higher interest rates than the closely regulated banks.

As the general credit crunch intensified in 2020 and 2021, Evergrande had difficulty selling its local yuan bonds, amid concerns about their creditworthiness. The company used its own funds to buy the bonds through special purpose vehicles, said a former employee of Evergrande’s finance team and a person familiar with the company’s financing arrangements. The people said those vehicles then sold the bonds at a higher yield, or interest payment, that investors would consider commensurate with the risk.

Sometimes the effective interest on these bonds would be as high as 18%, while in the open market it was 6%, the former finance team employee said. “The real price they were paying for finance was eating up the profits,” this person said.

Evergrande also diverted loans that had been secured by its property-services unit, which was publicly listed, to pay Evergrande’s operational and financial needs, a committee of Evergrande’s independent directors has said. The committee investigated the matter after banks seized 13.4 billion yuan ($1.84 billion)of deposits held by the property-services unit in 2021.

Last year, three senior executives stepped down after an initial probe said they were involved in diverting the loans.

“Evergrande has a particularly cowboy mentality,” said Stevenson-Yang, of J Capital Research.

Neither Hui nor the company responded to questions about whether Evergrande used special purpose vehicles to purchase and resell bonds or on the loan diversions. The company has said it was in talks with the property-services subsidiary about a repayment schedule and has adopted measures to address potential internal control weaknesses.

By 2021, Evergrande’s total liabilities had reached $300 billion. The cash-strapped company struggled to pay suppliers and complete homes. Its property revenues plunged.

Evergrande also failed to pay retail investors in its financial products on time, sparking protests across the country. Chaotic scenes erupted at company offices in Shenzhen in September 2021 as some 100 disgruntled investors crowded its lobby to demand repayment.

Days later, Hui said in a letter to staff that he was confident the company would “walk out of its darkest moment.”

But Evergrande reported a combined loss of $81 billion for 2021 and 2022. In March last year, trading of Evergrande’s Hong Kong-listed shares was suspended. Hui has reduced his stake in the company and his own personal fortune is now worth less than a tenth of the $36 billion it was at its peak in 2019, according to Forbes estimates.

Evergrande is in the process of seeking approvals from creditors and the courts for its offshore debt restructuring plan. Creditors are due to meet in late September to vote on the plan, which could allow them to recoup up to a quarter of what they are owed.

In a January letter to employees, Hui described 2023 as a “crucial year” and pledged to repay creditors and deliver on projects.

The year didn’t start well for him, though. A Hong Kong mansion creditors had seized from him was put on sale in March. Its estimated value: Around $112 million.

($1 = 7.2885 Chinese yuan renminbi)

(This story has been refiled to change the headline)

(Reporting by Engen Tham in Shanghai and by Julie Zhu and Clare Jim in Hong Kong. Additional reporting by the Shanghai Newsroom.; Editing by Cassell Bryan-Low)

By Brendan Pierson

(Reuters) – Drugmakers challenging a Biden administration program requiring them to negotiate with Medicare over the prices of selected costly drugs may not have a clear legal precedent on their side, but there are signs they could get a friendly hearing from the U.S. Supreme Court, legal experts said.

Even before the administration announced the first ten drugs for inclusion in the program on Tuesday, drug companies and industry groups had sued the U.S. Centers for Medicare and Medicaid Services (CMS) in an effort to derail it.

Eight lawsuits are pending in courts across the country, before liberal and conservative judges alike, setting up the possibility of a conflict that will push the issue to the nation’s top court.

Lawrence Gostin, a professor at Georgetown Law who has written publicly in support of the program, said he believed the lawsuits had “very little merit” but could nonetheless be persuasive to the Supreme Court’s conservative judges.

“The court has shown a considerable hostility to federal agency action, particularly when they are trying to do big things,” he said, pointing to the court’s ruling last year limiting the Environmental Protection Agency’s ability to regulate carbon emissions.

CMS is expected to soon begin the negotiations for lower prices on the 10 drugs that will take effect in 2026. The program, part of the Inflation Reduction Act signed by Democratic President Joe Biden, aims to save $25 billion per year on prescription medicines by 2031.

The drugs are some of the most lucrative on the market, including Bristol Myers Squibb’s blood thinner Eliquis, Novartis’ heart failure treatment Entresto and AstraZeneca’s diabetes drug Farxiga.

Those companies filed separate lawsuits against the administration, as have the U.S. Chamber of Commerce and the leading drug industry group Pharmaceutical Research and Manufacturers of America (PhRMA).

While the cases feature differences in the legal arguments, all claim the program gives the government power to effectively dictate the price, with drugmakers’ only recourse being pay prohibitive fines or stop taking part in Medicare and other government health programs.

The drug companies say that amounts to taking their property – their exclusive right to sell their patent-protected drugs – without just compensation, a violation of the U.S. Constitution’s Fifth Amendment.

Americans pay far more for prescription medicines than patients in other developed nations, where governments have long negotiated prices.

Though legal scholars said there was no exact precedent supporting either side’s position, the Supreme Court in recent years has upheld a strong view of property rights when interpreting the Fifth Amendment.

In 2015, the court struck down a Depression-era federal program requiring raisin producers to set aside a portion of their harvest. And in 2021, it ruled that two California fruit companies could not be compelled by state law to allow union organizers on their property.

A key question in the drugmakers’ cases will be whether the government is forcing their hand.

James Blumstein, a university distinguished professor at Vanderbilt Law School who played a key role in Republican states’ successful challenge to the Affordable Care Act’s requirement to expand Medicaid health insurance for low-income people, said the government can attach conditions to participating in federal programs, but with limits.

In the Affordable Care Act case, the Supreme Court found that the federal government overstepped in threatening to cut off all Medicaid funding for states that did not expand the program, effectively commandeering state governments.

‘CREATIVE LAWYERING’

Drug companies might be able to argue that Medicare’s power in the market was so great that requiring the negotiation as a condition was similarly coercive, Blumstein said. He acknowledged that there was no perfect precedent, but suggested the companies could make an analogy with antitrust laws that restrict private companies.

“That would have to be developed through, shall we say, creative lawyering,” he said.

Others were more skeptical.

“It’s not as though the government is storming into warehouses and taking the drugs,” said Robin Feldman, a professor at University of California College of the Law, San Francisco, specializing in health issues. He called the illegal taking claim “a heavy lift.”

The drugmakers also say the law forces them to sign contracts stating the negotiated prices are “fair.” They say that violates their right to free speech under the First Amendment of the Constitution by compelling them to parrot the government’s claim.

The Biden administration has said nothing in the Constitution prevents Medicare from negotiating drug prices.

The Supreme Court has upheld such compelled speech claims before, notably in a 2013 decision finding that non-governmental organizations could not be forced to adopt an anti-prostitution stance to receive federal funding to combat AIDS.

Blumstein said he believed compelled speech was the companies’ strongest claim.

Feldman said it was weakened by the fact that the companies could still publicly say whatever they wish about the program.

It could be some time before any of the cases reaches the Supreme Court. Only the Chamber of Commerce has sought a preliminary order halting the negotiations. Rulings in the drugmakers’ lawsuits likely will not come until next year at the earliest.

(Reporting By Brendan Pierson in New York; editing by Amy Stevens and Bill Berkrot)

(Reuters) – United States Commerce Secretary Gina Raimondo has said U.S. companies have raised concerns that China has become “uninvestible”, pointing to fines, raids and other actions that have made it too risky to do business in the world’s second-largest economy.

Major global firms ranging from banks to chipmakers are taking a largely cautious stance on their China business amid a frail recovery of the country’s economy from a pandemic slowdown.

Following are comments from some of the top firms on their China business during the latest reporting season:

ABB The engineering firm witnessed fewer new orders

from China in the quarter and said some customers

were shifting investments to other parts of Asia

due to geopolitical tensions.

3M Co The industrial conglomerate flagged continued

weak appetite for consumer electronics demand in

China.

AbbVie Inc The Botox maker said it has seen rates for

aesthetics treatments in China fully recover to

pre-COVID levels and continues to anticipate

strong growth through the rest of the year in the

country.

Anglo The global miner said it has been surprised by

American how slow the reopening of China has been but

believed a recovery was underway.

Apple The company said its iPhone sales in China grew

by “double digits” and that sales were also high

in other segments.

BHP Group The world’s biggest miner saw strong steel demand

from some sectors in China, but said it was too

early to assess the impact of Beijing’s policy

measures on the housing market.

Citigroup The lender called it the “biggest disappointment”

as growth decelerated after an initial

post-reopening pop.

Coca-Cola The company saw strong demand for some juice

business in China but also flagged destocking

activity in the second quarter.

Dow Inc The chemical maker said the anticipated rebound

following the end of pandemic curbs has yet to

fully materialize.

Estee Lauder The luxury firm forecast a weak annual profit,

owing to a slower-than-expected rebound in Asia

travel retail business.

Haleon The Sensodyne maker said sales from Fenbid pain

reliever gel doubled in China in the first half.

The company

Hormel Foods said

sales remained soft in China as

consumer demand slowed considerably and the

commodity environment is expected to remain

unfavorable due to higher inventories.

HP Inc “We don’t see it (demand recovery in China)

happening anywhere near anytime soon. And at this

point, we’re not building that recovery in any of

our plans,” CEO Enrique Lores said.

Intel “The China market, I think, has been well

reported, hasn’t come back as strongly as people

would have expected overall,” chipmaker Intel CEO

Pat Gelsinger said.

L’Oreal The Chinese market is “really picking up,”

although “not at the speed everybody had hoped

for,” L’Oreal CEO Nicolas Hieronimus told

Reuters.

LG Energy The company warned it faces weaker EV demand in

Solution China than previously expected.

LVMH The French luxury giant logged a strong rebound

in China during the second quarter.

Marriott The U.S. hotel operator said rebounding demand in

International China boosted its earnings.

Mastercard Inbound cross-border travel to China stood at

nearly 50% of 2019 levels, while outbound travel

was nearly 70%, the company said.

Merck & Co The drugmaker said use of Gardasil in China was

the biggest growth driver for the human

papillomavirus vaccine.

Nissan CEO Makoto Uchida said China sales outlook for

the automaker was now falling far below

production capacity.

NXP The chipmaker said China’s export curbs on

Semiconductor certain gallium and germanium products did not

s impact the company.

Panasonic The battery supplier said it saw no sign of a

full-fledged recovery in the factory automation

sector in China, and that it would take more time

for areas such as servers, data centres and ICT

to recover overall.

Procter & The Tide detergent maker reported a 1% drop in

Gamble its fourth-quarter volumes, mainly due to weaker

demand in the Greater China region.

Rio Tinto The world’s biggest iron ore producer struck a

cautiously optimistic tone on China as the

government has pledged more policies to boost

growth.

Royal Bank of Canada’s largest bank forecast slowing growth,

Canada partly due to a slowdown in China and elevated

climate and geopolitical risks.

Starbucks The coffeehouse chain saw a sharp recovery in

China, with third-quarter comparable sales

surging 46%.

Tapestry Coach handbags maker said it expects to benefit

from a recovery in demand from the “highly

profitable region” of China this fiscal year.

Thermo Fisher The company witnessed significantly slower

Scientific economic activity in China during the second

quarter. “We think it’s appropriate to assume

that this condition remains in place for the

remainder of the year,” said CFO Stephen

Williamson.

Toyota The automaker said foreign exchange rate

fluctuations and its response to price cuts in

China hurt its results there.

Visa “Looking at Mainland China specifically,

cross-border travel continued to improve but

remains well below 2019 levels,” CFO Vasant

Prabhu said.

Volkswagen The German carmaker cut its full-year sales

target after sales dipped in China, its top

market.

(Compiled by Savyata Mishra, Arunima Kumar, Niket Nishant, Granth Vanaik, Aditya Soni, Bhanvi Satija, Jaspreet Singh and Nathan Gomes; Edited by Shinjini Ganguli, Krishna Chandra Eluri and Shounak Dasgupta)

(Corrects number of outages in first paragraph to 300,000 from 300,00 (adds dropped zero))

(Reuters) -Over 300,000 homes and businesses were still without power along the U.S. East Coast from Florida to North Carolina after hurricane Idalia battered the region overnight, according to data from power outage tracker PowerOutage.us.

Hurricane Idalia plowed into the Big Bend region of Florida, where millions of residents had evacuated or hunkered down in anticipation of a dangerous surge of tidal water, but the storm’s power ebbed as it headed toward Georgia.

Florida had the most outages with about 149,705 out now, followed by Georgia with 109,629 out and South Carolina with 25,017 out, PowerOutage.us said.

The utility with the most outages is Georgia Power with around 78,045 customers without power, followed by Duke Energy with 37,329 customers without power in Florida.

Tampa Electric on Wednesday said power has been restored to most of its some 35,000 customers who were impacted.

Ahead of the storm, Tampa Electric secured about 3,000 workers from other utilities, including line crews, tree trimmers and damage assessors.

“The weather impact was not as severe as anticipated, and our crews were able to work through the night to restore customers during the storm,” said Archie Collins, CEO of Tampa Electric.

Here are the major outages by utility in Florida:

Power Companies Outages

Duke Energy 37,329

Suwannee Valley Electric Cooperative 28,438

Tri-County Electric Coop 19,612

Central Florida Electric Cooperative 18,890

Clay Electric Coop 18,436

Florida Power and Light Company 9,514

Talquin Electric Cooperative 9,103

City of Tallahassee 6,357

Total Out 149,705

Here are the major outages by utility in Georgia:

Power Companies Outages

Georgia Power 78,045

Satilla REMC 10,778

Excelsior EMC 8,216

Okefenoke REMC 7,801

Total Out 109,629

(Reporting by Brijesh Patel and Anushree Mukherjee in Bengaluru; additional reporting by Rahul Paswan and Anjana Anil; Editing by Mark Porter, Bill Berkrot, Josie Kao)

(Reuters) – Rapid advances in artificial intelligence (AI) such as Microsoft-backed OpenAI’s ChatGPT are complicating governments’ efforts to agree laws governing the use of the technology.

Here are the latest steps national and international governing bodies are taking to regulate AI tools:

AUSTRALIA

* Seeking input on regulations

The government is consulting Australia’s main science advisory body and considering next steps, a spokesperson for the industry and science minister said in April.

BRITAIN

* Planning regulations

The Financial Conduct Authority, one of several state regulators that has been tasked with drawing up new guidelines covering AI, is consulting with the Alan Turing Institute and other legal and academic institutions to improve its understanding of the technology, a spokesperson told Reuters.

Britain’s competition regulator said in May it would start examining the impact of AI on consumers, businesses and the economy and whether new controls were needed.

CHINA

* Implemented temporary regulations

China has issued a set of temporary measures effective from Aug. 15 to manage the generative AI industry, requiring service providers to submit security assessments and receive clearance before releasing mass-market AI products.

Following government approvals, four Chinese tech firms, including Baidu Inc and SenseTime Group, launched their AI chatbots to the public on Aug. 31.

EUROPEAN UNION

* Planning regulations

EU lawmakers agreed in June to changes in a draft of the bloc’s AI Act. The lawmakers will now have to thrash out details with EU countries before the draft rules become legislation.

The biggest issue is expected to be facial recognition and biometric surveillance where some lawmakers want a total ban while EU countries want an exception for national security, defence and military purposes.

FRANCE

* Investigating possible breaches

France’s privacy watchdog CNIL said in April it was investigating several complaints about ChatGPT after the chatbot was temporarily banned in Italy over a suspected breach of privacy rules.

France’s National Assembly approved in March the use of AI video surveillance during the 2024 Paris Olympics, overlooking warnings from civil rights groups.

G7

* Seeking input on regulations

Group of Seven (G7) leaders meeting in Hiroshima, Japan, acknowledged in May the need for governance of AI and immersive technologies and agreed to have ministers discuss the technology as the “Hiroshima AI process” and report results by the end of 2023.

G7 nations should adopt “risk-based” regulation on AI, G7 digital ministers said after a meeting in April.

IRELAND

* Seeking input on regulations

Generative AI needs to be regulated, but governing bodies must work out how to do so properly before rushing into prohibitions that “really aren’t going to stand up”, Ireland’s data protection chief said in April.

ISRAEL

* Seeking input on regulations

Israel has been working on AI regulations “for the last 18 months or so” to achieve the right balance between innovation and the preservation of human rights and civic safeguards, Ziv Katzir, director of national AI planning at the Israel Innovation Authority, said in June.

Israel published a 115-page draft AI policy in October and is collating public feedback ahead of a final decision.

ITALY

* Investigating possible breaches

Italy’s data protection authority plans to review other artificial intelligence platforms and hire AI experts, a top official said in May.

ChatGPT became available again to users in Italy in April after being temporarily banned over concerns by the national data protection authority in March.

JAPAN

* Investigating possible breaches

Japan expects to introduce by the end of 2023 regulations that are likely closer to the U.S. attitude than the stringent ones planned in the EU, an official close to deliberations said in July, as it looks to the technology to boost economic growth and make it a leader in advanced chips.

The country’s privacy watchdog said in June it had warned OpenAI not to collect sensitive data without people’s permission and to minimise the sensitive data it collects.

SPAIN

* Investigating possible breaches

Spain’s data protection agency said in April it was launching a preliminary investigation into potential data breaches by ChatGPT. It has also asked the EU’s privacy watchdog to evaluate privacy concerns surrounding ChatGPT.

UNITED NATIONS

* Planning regulations

The U.N. Security Council held its first formal discussion on AI in New York in July. The council addressed both military and non-military applications of AI, which “could have very serious consequences for global peace and security”, U.N. Secretary-General Antonio Guterres said.

Guterres in June backed a proposal by some AI executives for the creation of an AI watchdog like the International Atomic Energy Agency, but noted that “only member states can create it, not the Secretariat of the United Nations”.

The U.N. Secretary-General has also announced plans to start work by the end of the year on a high-level AI advisory body to regularly review AI governance arrangements and offer recommendations.

U.S.

* Seeking input on regulations

Washington D.C. district Judge Beryl Howell ruled on Aug. 21 that a work of art created by AI without any human input cannot be copyrighted under U.S. law, affirming the Copyright Office’s rejection of an application filed by computer scientist Stephen Thaler on behalf of his DABUS system.

The U.S. Federal Trade Commission (FTC) opened in July an expansive investigation into OpenAI on claims that it has run afoul of consumer protection laws by putting personal reputations and data at risk.

Generative AI raises competition concerns and is a focus of the FTC’s Bureau of Technology along with its Office of Technology, the agency said in a blog post in June.

Senator Michael Bennet wrote to leading tech firms in June to urge them to label AI-generated content and limit the spread of material aimed at misleading users. He had introduced a bill in April to create a task force to look at U.S. policies on AI.

(Compiled by Alessandro Parodi and Amir Orusov in Gdansk; Editing by Kirsten Donovan, Mark Potter and Milla Nissi)

By Noor Zainab Hussain, Chibuike Oguh and Jonathan Stempel

(Reuters) -Insurers were expected to face claims for billions of dollars from Hurricane Idalia which made landfall in Florida on Wednesday, adding to a challenging year for the industry that could result in higher premiums for customers.

Hurricane Idalia plowed into Florida’s Gulf Coast with fierce winds, torrential rains and pounding surf before weakening but turning its fury on southeastern Georgia, where floodwaters trapped some residents in their homes.

In Florida, UBS bank estimated average insured losses of $9.36 billion with a 50% chance of losses of over $4.05 billion and a 10% likelihood of losses of $25.6 billion, based on Aug. 28 data. The wide range reflected potential changes in the storm’s intensity and path.

At about $10 billion, Idalia would cost insurers less than 10 of the costliest hurricanes to hit the United States.

Global insurers are facing a challenging 2023 as reinsurers hiked rates on key types of coverage by as much as 50% from July 1, blaming sharp losses from the Ukraine war and increasing wildfires and hurricanes in states such as California and Florida.

“Historically, what happens when you have these hurricanes is that everyone gets worried about the liability following the hurricane,” said Thomas Hayes, chairman and managing member of Great Hill Capital LLC in New York, adding that insurers typically end up being able to raise prices after such events.

The impact could have a knock-on effect on reinsurers, which insure insurance companies, and have been raising rates in recent years because of steepening losses that industry players partly attribute to the impact of climate change. Higher reinsurance rates can affect the premiums that insurers charge their customers.

Nationally, U.S. reinsurance rates for policies that had claims for natural catastrophes rose 30%-50% during July renewals, while in Florida the increase was 30%-40%, reinsurance broker Gallagher Re said in July.

FLORIDA PAIN

Florida has a large number of very small, thinly capitalized insurers, insurance experts have said.

Some insurance firms including Farmers Insurance, Bankers Insurance and Lexington Insurance, an unit of AIG, have pulled out of Florida because of the risk of heavy losses, according to a July USA Today report.

A spokesperson for Farmers on Wednesday said that it had notified the Florida Office of Insurance Regulation of its decision to discontinue offering Farmers-branded auto, home, and umbrella policies in the state.

“This business decision was necessary to effectively manage risk exposure,” the spokesperson said. “Farmers offers insurance through several different brands, and this decision applies only to policies issued through our exclusive agency distribution channel.”

Lexington/AIG declined to comment, while Bankers Insurance did not immediately respond to a request for comment.

Citizens Property Insurance Corp, Florida’s non-profit, state-backed insurance provider that is seen as an “insurer of last resort”, has been gaining market share since 2022 as primary insurers reduce their exposure to the Florida market, UBS said in its note.

Citizens said on Wednesday it is well-capitalized to fund claims from policy holders whose properties are damaged by storms.

“There’s no issue with us paying claims to policy holders,” said Michael Peltier, a spokesperson for Citizens Property Insurance.

Berkshire Hathaway Vice Chairman Ajit Jain said in May that he was happy with the reinsurance the conglomerate had written, but that Berkshire had an “unbalanced portfolio” and a big Florida hurricane would cause a “very substantial loss,” according to a CNBC transcript of the event.

Berkshire did not respond to a request for comment.

(Reporting by Noor Zainab Hussain and Manya Saini in Bengaluru and Chibuike Oguh and Jon Stempel in New York; Editing by Devika Syamnath, Megan Davies and Cynthia Osterman)

By Clark Mindock

(Reuters) -3M on Tuesday secured preliminary approval for a $10.3 billion deal resolving claims by U.S. public water providers that the company polluted drinking water with toxic chemicals, less than a day after a group of 22 U.S. states and territories dropped their objections to the deal.

U.S. District Judge Richard Gergel in Charleston, South Carolina, said in a court filing that the settlement of hundreds of lawsuits against the Minnesota-based company over pollution by perfluoroalkyl and polyfluoroalkyl substances, or PFAS, is “sufficiently fair, reasonable and adequate” to justify moving forward.

Paul Napoli, an attorney for the water providers, called the preliminary approval a “pivotal moment in our ongoing efforts to ensure safe and clean drinking water.”

A 3M spokesperson said the agreement will benefit U.S. public water systems that provide water to “a vast majority of Americans” without further litigation.

The settlement will be considered during a final “fairness hearing” in February, when the judge will consider any outstanding objections or concerns before deciding whether to give final approval.

Dubbed “forever chemicals” because they do not easily break down, PFAS are used in a range of products from firefighting foam to non-stick cookware and have been linked to cancer and hormonal dysfunction.

The settlement announced in June would provide funds to cities, towns and other public water providers over a 13-year period to test for and treat PFAS contamination.

It stems from litigation over firefighting foams containing PFAS that were sprayed in fields or airports and left to seep into groundwater and other waterways.

3M, which has said the settlement would help support remediation “at any level,” has not admitted wrongdoing.

The states had objected in July, saying the deal did not adequately account for the damage caused by PFAS and did not give water providers enough information to understand whether the settlement was suitable or not.

The preliminary approval came hours after the states withdrew those objections on Monday night, citing changes to the deal following weeks of negotiations.

3M, the water providers and the states said in a joint court filing that the changes allow individual water providers to obtain estimates on their expected payout before agreeing to the deal, give providers more time to decide whether to opt out of the deal, and clarify that states can still pursue separate lawsuits over PFAS contamination.

New York Attorney General Letitia James, whose office originally objected to the deal, said in a statement on Tuesday that the “new agreement will ensure 3M is held accountable.”

California and several other states and U.S. territories that had objected to the deal said in a separate filing on Monday that they still thought 3M should be paying more to settle the cases, even though they no longer formally object.

The U.S. Environmental Protection Agency has called PFAS an “urgent public health and environmental issue.”

3M in December set a 2025 deadline to stop producing PFAS.

(Reporting by Clark Mindock in New YorkEditing by Alexia Garamfalvi, Matthew Lewis and Bill Berkrot)

Microsoft Backed OpenAI Nearing $1B Annual Revenues on AI Uptake

Microsoft-backed OpenAI is on course to become a $1 billion artificial intelligence business empire.   Reports indicate that the startup behind the popular chatbot ChatGPT is generating revenues upwards of $80 million a month and is consequently on track to hit $1 billion in annual revenues. If true, then the startup is on the pathway to profitability as it recoups losses of about $540 million accrued last year.

OpenAI Robust Growth

The revenues that OpenAI is raking up monthly do not come as a surprise, as ChatGPt, the flagship AI chatbot, is already being used by more than 80% of Fortune 500 companies. A growing number of organizations have found ways to use the tool for coding and brainstorming, among other operations.

OpenAI has grown to become one of the most sought-after startups, owing to its innovation powered by revolutionary artificial intelligence technology. ChatGPT, which is the most popular solution out of the startup, is a small piece of the puzzle. The startup has come up with AI-powered solutions for creating content from videos to poetry.

In recent months, the startup has inked strategic partnerships with major corporations to incorporate its technology into their businesses and products. An investment of about $10 billion from Microsoft has propelled OpenAI to become a one-stop shop for AI solutions and innovations, spearheading growth in the burgeoning segment.

ChatGPT remains OpenAI’s biggest AI invention as it continues to send shockwaves in various sectors. Early in the year, Microsoft rattled the tech industry after confirming plans to integrate the chatbot on its search engine Bing in the race to counter Google’s monopoly on the multibillion-dollar industry. The integration push forced Google to unveil Bard, an AI-powered chatbot, as it also seeks to safeguard its edge in the segment.

Targeting Corporate Clients

Fast forward, OpenAI has unveiled a corporate version of its chatbot ChatGPT as it aims to target more corporate clients. The corporate version has added features and privacy safeguards that should allow OpenAI to attract a broad mix of businesses and customers, strengthening its revenue base even further.

The new tool comes with unlimited use of OpenAI’s most powerful generative AI model, GPT 4, and data encryption. Users can type in a prompt and receive a written response from ChatGPT enterprise within seconds. The startup worked with more than 20 companies to test the ChatGPT enterprise.

The corporate version should allow OpenAI to make more money amid the increased adoption of AI solutions and Innovation in the corporate and mainstream sections. The company is already making impressive strides along these lines amid a premium subscription and service launch. It has also started offering companies paid access to its application and programming interface.

Alphabet is another company that is betting big on artificial intelligence as it looks to counter the threat posed by Microsoft on search and cloud computing. Through its tech unit, Google, the tech giant has resorted to partnering and working with other companies as it looks to strengthen its competitive edge around emerging technology. Consequently, it has started adding AI tools and models from other companies, including Meta Platforms and Anthropic, to its cloud unit.

By Jacob Gronholt-Pedersen

COPENHAGEN (Reuters) – Lego continued to take market share in the first six months of the year even as the toy market declined and Chinese consumers returned to stores at a slower pace than expected, the Denmark-based toymaker said on Wednesday.

The family-owned company, known for its colourful plastic bricks, said sales in January through June rose 1% to 27.4 billion Danish crowns ($4 billion). By comparison, Lego grew sales 17% last year and 27% the year before.

“It has been a challenging six months for the toy industry,” Chief Executive Niels Christiansen told Reuters. “But we’ve taken market share and have grown 10% faster than the market.”

The company’s consumer sales grew 3% in a market that declined by 7%, meaning it grabbed market share from competitors like Hasbro and Barbie-maker Mattel.

However Christiansen adjusted his forecast for sales growth this year to “somewhere in the single-digits,” having in March forecast growth of a “high single-digit percentage”.

The best performing Lego themes included Star Wars, Technic, and Icons, showcasing the likes of the Eiffel Tower or the “Back to the Future” time machine, the company said.

The company did not raise prices for its Lego sets during the first half year and does not plan to do so, as freight and raw material costs had normalized, Christiansen said.

Lego’s operating profit fell 19% to 6.4 billion crowns.

The company opened 89 new stores in the first six months of the year and plans to open around 150 in total this year, bringing the global total to around 1,050, Christiansen said.

He said he believes Lego can continue opening stores at the same pace for another five to 10 years.

Since taking the helm at Lego in 2017, Christiansen has pursued a strategy of investing in combining the physical brick products with the digital universe, expanding the product range, and opening hundreds of new stores.

More than half of the new store openings this year will be in China, where the total number of stores will exceed 500 by the end of the year, Christiansen said.

The company continues investing in the country even as Chinese consumers returned to stores after the pandemic at a slower pace than anticipated.

“The Chinese middle class, the amount of kids in China to potentially have the opportunity to play with Lego, is huge. We are underrepresented, so the investments and the building in China continue,” said Christiansen.

($1 = 6.8870 Danish crowns)

(Reporting by Jacob Gronholt-Pedersen; Editing by David Holmes)