Climate Change Data

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• By year end contraction was evident, with the unemployment rate approaching 5% and recession a distinct possibility. What began in the housing market, with loans to marginal borrowers who couldn’t service their debt, spread to all manner of complex financing transactions leading to the tightening of lending standards and credit availability as bank capital shrank. Deals could no longer be financed on advantageous terms, and the equity market faltered despite valuations that seemed reasonable.

Mitigation Strategies

• An accommodative Federal Reserve, and some degree of fiscal stimulus, together with improvement in net exports should help, but a relatively lengthy period of tepid demand growth, sluggish earnings and modest equity returns appears to be the most realistic prospect.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• supply chain disruptions resulting from the Japanese disaster
• housing activity remains at anemic levels

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• volcanic activity centered on The Ring of Fire

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• significantly colder than normal weather
• reduced business confidence as a result of changing geo-political winds and continuing uncertainty surrounding the pace and direction of monetary and fiscal policies
• consequences of the implementation of the Affordable Care Act

Mitigation Strategies

• weather related effects and fiscal policy drag should abate
• households are now aware of the premiums and how to budget their finances this year
• Penalties for companies have also been delayed for another year

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Social Achievements

• Appointment of Ms. Clara E. Del Villar and Ms. Rose P. Lynch to the Board of Directors, bringing diverse experience in financial services, technology, energy, publishing, fashion, apparel, and beauty industries.

Governance Achievements

• Repurchase of 395,313 shares of Preferred Stock in the open market at prices below $25 per share.

Climate Goals & Targets

Environmental Challenges

• High valuations in the equity market, potentially discounting much of the tax benefits from the tax bill passage.
• Uncertainty over the behavior of central banks and their decisions with respect to interest rates.

Mitigation Strategies

• Maintaining vigilance given the historically unusual market environment.
• Cautious approach due to countervailing forces and the absence of a significant market correction.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Social Achievements

• On December 31, 2020, Ms. Savannah Sachs was appointed to the Board of Directors of the Company.

Climate Goals & Targets

Environmental Challenges

• Operationally, we had prepared well for our employees’ ability to work remotely as the pandemic unfolded.
• Returns relative to the S&P 500 suffered, however, as much of the indexes’ performance for the year was driven by a small number of leading technology companies and select healthcare securities.
• A few of our companies struggled in the new pandemic environment, we evaluated and culled a few, while adding others likely to benefit.
• In consequence of the reduced exposure and out of an abundance of caution, cash balances rose markedly.

Mitigation Strategies

• Our application of technology over the years to reduce our dependence on physical infrastructure helped enormously.
• we evaluated and culled a few [struggling companies], while adding others likely to benefit.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• The pandemic has likely altered companies’ business plans substantially and perhaps permanently, as “work from and shop at home” become more pervasive among consumers. Companies have been forced to adopt operational strategies that may have been intended over a much longer period, incurring higher costs and implying lower margins.

Mitigation Strategies

• During the second quarter, General American elevated its portfolio liquidity amidst the pandemic uncertainty and will continue to look for companies whose shares are mispriced based on our expectations of their long term prospects for sales, earnings, and cash flow.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions
• Rising oil prices
• Higher interest rates
• More dangerous virus variants
• Policy errors
• Geopolitical events
• Inflation
• Rising labor costs

Mitigation Strategies

• Maintaining liquidity to take advantage of market opportunities
• Modest leverage

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Heightened inflation, rapidly increasing interest rates and quantitative tightening by the Federal Reserve Bank, a generally slowing economy, and residual fiscal stimulus in response to the COVID-19 pandemic.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Volatility in financial markets due to Federal Reserve interest rate hikes and quantitative tightening.
• Strong dollar impacting other economies.
• Liquidity problems emerging in financial markets, particularly sovereign debt.
• Potential corporate earnings disappointments and margin contraction.
• Correction in housing prices in the U.S. and Canada.

Mitigation Strategies

• Investing in well-run companies with significant discounts to their long-term potential.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Increased uncertainty amid rising interest rate and inflation expectations, slowing economic growth, and the invasion of Ukraine by Russia.
• Russian import bans stressing supplies of raw materials.
• Loss of productive capacity in Ukraine increasing price pressures.
• China’s “zero COVID” policy disrupting supply chains.
• Loss of consumer confidence increasing investor anxiety.
• Rising interest rates threatening the prices of securities of companies without earnings and potentially putting the housing market at risk.

Mitigation Strategies

• The equity market and economy have been discounting these challenges and continue to be supported by negative real interest rates.
• Equities remain the preferred alternative to fixed-income securities.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Social Achievements

• Ms. Linda J. Genid retired after 40 years with the company; Ms. Connie A. Santa Maria appointed Corporate Secretary.

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Slowing economic growth at a time of declining liquidity, stickier inflation, and weaker consumer confidence.
• Elevated geopolitical uncertainty (terrorist attack in Israel, war in Ukraine, belligerence in the South China Sea) reducing investor risk appetite.
• High-interest rates on U.S. Treasury securities providing intense competition for marginal investment dollars compared to equities.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Elevated valuations for the largest companies.
• High-frequency data suggesting a declining probability of a soft landing for the economy.
• Potential for higher volatility in the equity market.
• Stiff competition from fixed-income securities.

Mitigation Strategies

• Continue to view equities favorably for the long term.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Stubborn inflation
• Rising interest rates
• Increasing geopolitical tensions

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Stubborn inflation
• Rising interest rates
• Increasing geopolitical tensions

Supply Chain Management

Climate-Related Risks & Opportunities