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California exodus of home insurance companies continues

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California exodus of home insurance companies continues

Two more insurers are pulling out of California’s troubled homeowners insurance market, straining a marketplace that already has seen the pullback of several other companies that have cited increase costs related to wildfire risks.

Tokio Marine America Insurance Co. and Trans Pacific Insurance Co. submitted filings to the California Department of Insurance stating they will not renew 12,556 homeowners policies with a premium value of $11.3 million starting July 1. Also not being renewed are 1,624 dwelling fire and liability policies with a premium value of $1.7 million typically sold to owners of rental properties, as well as personal umbrella coverage.

The companies, subsidiaries of Tokyo-based Tokio Marine Holdings, are completely exiting the homeowners marketplace. Several major insurers, meanwhile, including State Farm, Farmers and Allstate, have limited their exposure in California by cutting back on the number of new policies they issue or tightening underwriting standards. State Farm, for example, announced in March it would not renew 72,000 policies.

In deciding to pull out of the so-called personal lines market, Tokio Marine cited as its reason that its “technology supporting the personal lines business is at the end of its useful life. Due to the small size of our personal lines book and the undue financial burden of the cost to update necessary automation, we are unable to continue supporting our personal lines operation,” the company said in filings with the Department of Insurance.

Department spokesman Michael Soller said the the decision would have a limited impact on the market due to the small number of policies.

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Tokio Marine Holdings, a unit of Japanese conglomerate Mitsubishi, did not respond to an emailed request for comment.

California’s homeowners insurance crisis has been building for years as climate change and extreme weather have contributed to catastrophic fires that destroyed thousands of homes. There is now an effort in Sacramento to fix the problem through a series of reforms that have put the insurance industry and consumer advocates at odds.

Insurance Commissioner Ricardo Lara is seeking to make the market more attractive for insurers by allowing them to include the costs for reinsurance and future wildfires in their premiums. Consumer advocates worry the methodology for estimating the costs of future fires will not be adequately transparent and burden homeowners with excessive premiums. They also oppose passing on reinsurance costs to homeowners.

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Meta now has an AI chatbot. Experts say get ready for more AI-powered social media

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Meta now has an AI chatbot. Experts say get ready for more AI-powered social media

When you use Facebook Messenger these days, a new prompt greets you with this come-on: “Ask Meta AI anything.”

You may have opened the app to send a text to a pal, but Meta’s new artificial-intelligence-powered chatbot is tempting you with encyclopedic knowledge that‘s just a few keystrokes away.

Meta, the parent company of Facebook, has planted its home-grown chatbot on its Whatsapp and Instagram services. Now, billions of internet users can open one of these free social media platforms and draw on Meta AI’s services as a dictionary, guidebook, counselor or illustrator, among many other tasks it can perform — although not always reliably or infalliably.

“Our goal is to build the world’s leading AI and make it available to everyone,” said Mark Zuckerberg, the chief executive officer at Meta, as he announced the chatbot’s launch two weeks ago. “We believe that meta AI is now the most intelligent AI assistant that you can freely use.”

As Meta’s moves suggest, generative AI is making its way into social media. TikTok has an engineering team focused on developing large language models that can recognize and generate text, and they’re hiring writers and reporters who can annotate and improve the performance of these AI models. On Instagram’s help page it states, “Meta may use [user] messages to train the AI model, helping make the AIs better.”

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TikTok and Meta did not respond to a request for comment, but AI experts said social media users can expect to see more of this technology influencing their experience — for better or possibly worse.

Part of the reason social media apps are investing in AI is that they want to become “stickier” for consumers, said Ethan Mollick, professor at the Wharton School of the University of Pennsylvania who teaches entrepreneurship and innovation. Apps like Instagram try to keep users on their platforms for as long as possible because captive attention generates ad revenue, he said.

At Meta’s first-quarter earnings call, Zuckerberg said it would take some time for the company to turn a profit from its investments in the chatbot and other uses of AI, but it has already seen the technology influencing user experiences across its platforms.

“Right now, about 30% of the posts on Facebook feed are delivered by our AI recommendation system,” Zuckerberg said, referring to the behind-the-scenes technology that shapes what Facebook users see. “And for the first time ever, more than 50% of the content people see on Instagram is now AI recommended.”

In the future AI won’t just personalize user experiences, said Jaime Sevilla, who directs Epoch, a research institute that studies AI technology trends. In fall 2022, millions of users were enraptured by Lensa’s AI capabilities as it generated whimsical portraits from selfies. Expect to see more of this, Sevilla said.

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“I think you’re gonna end up seeing entirely AI-generated people who post AI-generated music and stuff,” he said. “We might live in a world where the part that humans play in social media is a small part of the whole thing.”

Mollick, author of the book “Co-intelligence: Living and Working with AI,” said these chatbots are already producing some of what people read online. “AI is increasingly driving lots of communication online,” he said. “[But] we don’t actually know how much AI writing is out there.”

Sevilla said generative AI probably won’t supplant the digital town square created by social media. People crave the authenticity of their interactions with friends and family online, he said, and social media companies need to preserve a balance between that and AI-generated content and targeted advertising.

Although AI can help consumers find more useful products in the daily lives, there’s also a dark side to the technology’s allure that can teeter into coercion, Sevilla said.

“The systems are gonna be pretty good at persuasion,” he said. A study just published by AI researchers at the Swiss Federal Institute of Technology Lausanne found that GPT-4 was 81.7% more effective than a human at convincing someone in a debate to agree. While the study has yet to be peer reviewed, Sevilla said that the findings were worrisome.

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“That is concerning that [AI] might like significantly expand the capacity of scammers to engage with many victims and to perpetrate more and more fraud,” he added.

Sevilla said policymakers should be aware of AI’s dangers in spreading misinformation as the United States heads into another politically charged voting season this fall. Other experts warn that it’s not if, but how AI might play a role in influencing democratic systems across the world.

Bindu Reddy, CEO and co-founder of Abacus.AI, said the solution is a little more nuanced than banning AI on our social media platforms — bad actors were spreading hate and misinformation online well before AI entered the equation. For example, human rights advocates criticized Facebook in 2017 for failing to filter out online hate speech that fueled the Rohingya genocide in Myanmar.

In Reddy’s experience, AI has been good at detecting things such as bias and pornography on online platforms. She’s been using AI for content moderation since 2016, when she released an anonymous social network app called Candid that relied on natural language processing to detect misinformation.

Regulators should prohibit people from using AI to create deepfakes of real people, Reddy said. But she’s critical of laws like the European Union’s sweeping restrictions on the development of AI. In her view it’s dangerous for the U.S. to be caught behind competing countries, such as China and Saudi Arabia, that are pouring billions of dollars into developing AI technology.

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So far the Biden administration has published a “Blueprint for an AI Bill of Rights” that offers suggestions for the safeguards that the public should have, including protections for data privacy and against algorithmic discrimination. It isn’t enforceable, though it hints at legislation that may come.

Sevilla acknowledged that AI moderators can be trained to have a company’s biases, leading to some views being censored. But human moderators have shown political biases too.

For example, in 2021 The Times reported on complaints that pro-Palestinian content was made hard to find across Facebook and Instagram. And conservative critics accused Twitter of political bias in 2020 because it blocked links to a New York Post story about the contents of Hunter Biden’s laptop.

“We can actually study like what kind of biases [AI] reflects,” Sevilla said.

Still, he said, AI could become so effective that it could powerfully oppress free speech.

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“What happens when all that is in your timeline conforms perfectly to the company guidelines?” Sevilla said. “Is that the kind of social media you want to be to be consuming?”

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Sam Ash, iconic retailer to musicians, plays its last notes

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Sam Ash, iconic retailer to musicians, plays its last notes

Kristina Bialkowski remembers the day she got her first guitar at the Sam Ash Music Store on Sunset Boulevard in Hollywood.

She was 10 and her father, who had started teaching her to play the instrument, took her into the shop down the street from their home to browse.

Now a musician who sometimes plays alongside the singer Geia, Bialkowski recalled staring up at the menagerie of instruments on the wall and feeling elated when she made her choice: a black, electric Fender.

She returned through the years to buy a synthesizer and a bass and, in high school, to hang out with friends, so she felt stunned recently when she drove by and saw a sign announcing that the shop — along with all the other locations in the iconic music chain that grew from a single store in Brooklyn into a nationwide business behemoth — would soon close down.

“No way!” thought Bialkowski, 29, who works in music marketing and also posts covers of songs on Instagram and TikTok. But then she thought back to her recent trips to the shop and how much less busy it had looked than when she was a young girl.

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“I guess it makes sense,” she said. “No one really buys instruments anymore. Everyone is a DJ or they’re buying online.”

The company announced the imminent closure of all its locations — including stores in San Diego, Westminster, Torrance, Ontario and Industry — in a post on Instagram this week, saying it had made the decision with “a heavy heart.”

“Thank you,” it read, “for allowing us to serve musicians like you for 100 years.”

The company was founded in Brooklyn in 1924 by Sam and Rose Ashkynase, a young couple who both immigrated to the U.S. as children, he from Austria and she from Russia.

To cover the down payment on the small shop, they pawned Rose’s $400 engagement ring. They managed to stay open through the lean years of the Great Depression, according to a biography on the company’s website.

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As it grew through the decades, expanding to other parts of New York and then across the nation, the company stayed in the family — run, at times, by the couple’s sons, grandsons and eventually their great-grandchildren. While Sam died in the mid-1950s, Rose continued to work until she was 80.

In 1998, as the company prepared for a big expansion into the Southland, The Times chronicled how the chain’s growth might hurt independent music stores in the region.

Paul Ash, one of the founders’ sons, who was president of the company at the time, brushed off such concerns, saying, “We feel that we expand a market, not shrink it.”

In a brief history on the company’s website, they describe their story as the quintessential American Dream and discuss “retaining the basic concepts of a family-run business even today.”

“The Sam Ash saga,” it reads, “is a classic business story.”

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Indeed, the company’s decision to close all of its retail locations is part of one of the most defining business stories of the modern era, in which bricks-and-mortar stores have struggled to compete with online commerce.

In recent months, several other companies, including Macy’s, REI and 99 Cents Only, have announced plans to close locations in Southern California.

In a written statement, Derek Ash, one of the founders’ great-grandsons, declined to answer a question about why the stores were closing but confirmed that some locations would shutter by the end of the month and others would have sales going through mid-July.

He wrote that the family will always cherish memories of creating a space where many musicians tried out new instruments for the first time or met future band members. Over four generations, he said, they “had the privilege to watch the evolution of music in America.”

For Michael Gallant, who worked at the chain’s location in City of Industry for a few months in 2010, the job provided a critical sense of community that lasted far longer than the gig itself.

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The 48-year-old musician — who has performed for years as a member of several Beatles tribute bands and will tell you, with a laugh, that “I’m the Paul McCartney guy” — said he has maintained friendships with several other Sam Ash employees and still cherishes memories of meeting customers.

When he recently heard about the closures through the grapevine, he said he felt bummed but not surprised.

“It certainly sucks,” he said. “But I saw the writing on the wall, mainly ’cause of the internet.”

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Sony and Apollo make formal $26-billion joint bid for Paramount

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Sony and Apollo make formal $26-billion joint bid for Paramount

Sony Pictures Entertainment and Apollo Global Management have officially put in a bid for Paramount Global, as competition for the storied film and TV company continues to heat up.

Sony and Apollo submitted their $26-billion all-cash offer this week, according to a person familiar with the matter who was not authorized to comment.

Under the terms of the proposed deal, Sony would take a majority shareholder role in the company, with Apollo as a minority shareholder. The joint bid is a nonbinding expression of interest.

The companies do not see regulatory approval as a hurdle to the deal, the person said, even though it would lead to the combination of two of Hollywood’s major movie studios.

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Apollo already owns a minority stake in “Dune” producer Legendary Entertainment. The deal could run up against Federal Communications Commission rules that restrict foreign ownership of broadcast TV stations, so Paramount’s CBS station group likely would have to be sold or licensed to Apollo, which already controls Atlanta-based Cox Media Group.

Culver City-based Sony Pictures is owned by Tokyo-based Sony Corp., the electronics giant behind the PlayStation video game system.

The bid comes as Paramount nears the end of a 30-day exclusive negotiating period on Friday with tech scion David Ellison’s Skydance Media, which recently sweetened its takeover offer after outcry from shareholders, who saw the original bid as dilutive to their shares.

Ellison has teamed up with investment firms RedBird Capital Partners and KKR to make a bid to acquire Paramount controlling shareholder Shari Redstone’s National Amusements holding company.

The complicated two-step proposition would involve Paramount acquiring Skydance Media and Ellison taking control of Paramount, including the storied Melrose Avenue Paramount studio lot, broadcast network CBS and various cable channels such as MTV and Comedy Central.

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Skydance’s revised offer includes a cash infusion for Paramount and money earmarked for nonvoting shareholders, who have raised concerns that the prior bid would benefit the Redstone family at their expense.

On Monday, Paramount ousted chief executive Bob Bakish, who was known to have opposed the Skydance proposal. His opposition irked Redstone, who also had questioned some of Bakish’s business decisions, including not selling cable network Showtime, according to people familiar with the situation.

The company said three of its top entertainment executives would jointly run the firm: Paramount Pictures CEO Brian Robbins; CBS CEO George Cheeks; and Showtime/MTV Entertainment Studios chief Chris McCarthy.

Analyst Jamie Lumley at financial research firm Third Bridge described the bid as Sony and Apollo’s best attempt to make Paramount an offer it couldn’t refuse, though it could be futile at this point.

“Ultimately, this offer could be coming in after the 11th hour if the sweetener Skydance added in last weekend is enough to get a deal over the line,” Lumley wrote in a statement. “With the exit of Bob Bakish as CEO, Paramount is likely looking to finalize a deal as soon as possible as it plots a path forward for its beleaguered business.”

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Shares of Paramount were up 12.5% to $13.80 around 12:30 p.m. PDT on Thursday.

Adding to the complications, Paramount also is in negotiations with Charter Communications to work out a new deal for carriage of the company’s TV channels. Paramount is heavily reliant on the fees it reaps from its TV stations, despite flagging ad revenue and increasing cord cutting. The outcome of these negotiations could factor into Paramount’s valuation in the event of a sale.

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