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Case on Lighthouse Insurance Company: Help Me Make It Through the Night

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Arne Kalleberg

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Louisiana Judge Orders Liquidation of Lighthouse

A Louisiana district court judge last week ordered the liquidation of Lighthouse Property Insurance Co., the troubled homeowners insurer who held policies in Louisiana, Florida, Texas, North Carolina and South Carolina.

Judge Richard “Chip” Moore, III of the 19th Judicial District Court in East Baton Rouge delivered the liquidation order less than a month after the Louisiana Department of Insurance placed Lighthouse into receivership. Moore wrote that further efforts to rehabilitate the insurer and its sister companies would be “futile.”

The order named Billy Bostick as appointed receiver and Frank W. McNabb as deputy receiver. Texas-based Bostick is partner at Bostick/Crawford Consulting Group, which performs financial and market conduct examinations for insurance regulators and consulting services on insurance receiverships.

Founded in 2008, Lighthouse Property Insurance Co. was inundated with approximately 16,000 Hurricane Ida claims, which followed three major hurricanes in 2020. The carrier possessed $204 million in assets, $160 million in liabilities, and $44 million in capital and surplus in 2020 but reported three straight years of net losses.

Lighthouse and its subsidiary Lighthouse Excalibur had approximately 30,000 policies in Louisiana, covering 3.27% of the state’s homeowners insurance market. Lighthouse held over 13,000 policies in Florida at the end of 2021, the Florida Office of Insurance Regulation has reported. Lighthouse had 170,000 homes insured in all five states it was admitted in 2020.

The liquidation order authorizes Louisiana Insurance Commissioner Jim Donelon to coordinate operation of the receivership with the guaranty associations of the five states where Lighthouse holds policies. Insurance guaranty funds are non-profit, member-funded associations responsible for paying claims when insurers go insolvent. The Louisiana Insurance Guaranty Association (LIGA) will pay up to $500,000 per pending claim.

Lighthouse is the fourth Louisiana insurer to go insolvent in the wake of the 2020-21 hurricane seasons. Last December LIGA assessed a $100 million fee on Property & Casualty insurers after the insolvency of Access Home Insurance Co. and State National Fire Insurance Co.

It is the third property insurer serving the Florida market to be deemed insolvent so far this year. The Florida Insurance Guaranty Association announced on its website that the association has been activated to help pay outstanding Florida claims owed by Lighthouse. Corey Neal, executive director of FIGA, said in April that it was too soon to know how much of an assessment FIGA might place on carrier’s in response to Lighthouse’s liquidation.

“There’s no good indication of what liabilities FIGA might have,” Neal told Insurance Journal . “We’re working through all of that.”

In most cases, FIGA is limited to paying no more than $300,000 per claim but an additional $200,000 may be available for structures and contents. Unearned premiums will be returned to policyholders about 45 to 60 days after the liquidation date, FIGA said.

The FIGA board of directors voted last week to borrow $250 million to help the association pay claims left behind by insolvent insurers in the last six months, the News Service of Florida reported. The debt will likely have to be paid by further assessments on insurers.

A Frequently Asked Questions page on Lighthouse’s website says the insurer’s receiver, Bostick, has sent out 360+ requests for proposals to homeowner insurance companies who are licensed in the states of Louisiana, North Carolina, South Carolina, Florida and Texas for the acquisition of the policies of Lighthouse and/or Lighthouse Excalibur.

Lighthouse’s liquidation followed a series of announcements that indicated the company was running out of time to regain financial footing.

In mid-February, the insurer Lighthouse announced it had stopped writing new policies in Florida . Demotech withdrew its Financial Stability Rating on March 29.

Topics Legislation Louisiana

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• Categories: Southeast News , Texas / South Central News Topics: Florida Insurance Guaranty Association , guaranty , guaranty fund , Lighthouse liquidation , Lighthouse Property Insurance Corp. (Lighthouse)
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Lighthouse insurance’s troubled waters: allegations of financial mismanagement and fraud.

Lighthouse Insurance’s collapse has sparked serious concerns about financial mismanagement and alleged fraud within the company. Key figures such as Patrick L. White and Lawrence E. White are at the center of these allegations, accused of actions that led to the company’s financial downfall. The role of reinsurance brokerage TigerRisk, now rebranded as Howden Re, and its representatives, including Tim Fox, Kyle Menendez, and Jarad Madea, is also under scrutiny in the ongoing lawsuit. This case study provides a comprehensive analysis of the alleged corporate misconduct and its broader implications for the insurance industry.

The Rise of Lighthouse Insurance

Lighthouse Insurance serves as a significant provider of homeowners’ insurance in the southeastern United States, particularly in Florida and Louisiana. The company was known for its extensive coverage options, aiming to protect homeowners against natural disasters common in the region. These disasters included hurricanes and floods. Lighthouse quickly became a key player in the market, boasting thousands of policyholders who rely on its services for financial protection and peace of mind.

However, as the company expanded, underlying financial and managerial issues surfaced. Despite its outward success, Lighthouse Insurance was plagued by internal challenges that eventually contributed to its downfall .

Early Signs of Financial Trouble

Lighthouse Insurance’s financial instability began to surface as early as 2018, when the company started reporting significant losses. By 2020, these troubles had compounded, with Lighthouse reporting a net loss of $72 million. This was largely due to the impact of three major storms in Louisiana. Despite these setbacks, the company continued operations and actively sought additional capital investments to stabilize its finances.

As Lighthouse’s financial woes deepened, Patrick White and Lawrence White assured stakeholders that the company could weather the storm. Their optimistic projections, however, masked deeper issues within the company’s financial structure. By mid-2021, it became evident that financial problems were more severe than initially disclosed.

Confidential Conservatorship and Hurricane Ida

In July 2021, the Louisiana Department of Insurance placed Lighthouse Insurance into confidential conservatorship. This measure was intended to give the company time to find potential buyers and address its financial issues discreetly. However, this critical information was not disclosed to potential investors, including Fortinbras Enterprises, a decision that proved contentious.

The situation worsened in August 2021 when Hurricane Ida struck, causing extensive damage and exacerbating Lighthouse’s financial instability. The company’s projected hurricane losses exceeded $300 million, pushing it closer to fiscal collapse. Despite these mounting losses, executives continued to portray a more stable financial outlook to potential investors.

Misleading Investors and Securing Investments

Amidst these growing financial troubles, key executives, including Patrick White and Lawrence White, along with TigerRisk representatives, allegedly misled investors about the true state of the company’s finances. Tim Fox, Kyle Menendez, and Jarad Madea from TigerRisk assured investment groups that Lighthouse’s losses were manageable and covered by reinsurance. These assurances led outside creditors to invest $65 million in November 2021, under the false impression that their investment was secure.

The investment by outside creditors was based on misleading assurances. TigerRisk representatives, leveraging their long standing relationship with Lighthouse, are accused of failing to disclose critical information about the company’s financial instability. This omission played a crucial role in securing the substantial investment, which only postponed the inevitable collapse.

Disclosure of Financial Distress

By early 2022, Lighthouse’s financial distress had become apparent. In February, Patrick White disclosed to investors that the company was in severe financial trouble. In March, Demotech withdrew its financial rating for Lighthouse, and in April, the Louisiana Commissioner placed the company into liquidation proceedings . This revelation not only impacted investors but also left thousands of policyholders in Florida and Louisiana without insurance coverage.

The disclosure was a significant blow to all stakeholders. Policyholders, many of whom were already struggling with natural disaster aftermath, were suddenly left without the crucial insurance coverage they depended on. The ripple effects of the liquidation were felt across the region, exacerbating financial instability among households and businesses.

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Investors File Complaints Against Former Lighthouse Insurance CEO and TigerRisk Advisors for Massive $65 Million Fraud in New York Supreme Court and Florida’s Ninth Judicial Circuit Court

NEW YORK, April 22, 2024 (GLOBE NEWSWIRE) -- Today a private investment group announced legal filings against Lighthouse Insurance CEO Patrick White, his father Lawrence White, the Lighthouse Family Trust, Lawrence E. White Family Foundation, and insurance brokerage TigerRisk (a portfolio company of General Atlantic now doing business as Howden Re ) in New York Supreme Court and Florida’s Ninth Judicial Circuit Court. Filed on behalf of an investment group including HT Investments and its advisor Fortinbras Enterprises, the suit states that the defendants willfully defrauded the plaintiffs out of $65 million.

This filing follows a prior complaint filed by the plaintiffs, focused on the White Family’s insider relationship and close financial ties with One Florida Bank, which received $19 million of the $65 million investment.

The two lawsuits announced today state that Patrick and Lawrence White worked with TigerRisk to defraud the investment group out of $65 million in December 2021, by materially misrepresenting and obscuring facts about Lighthouse’s dire financial problems, including that Lighthouse had been placed into conservatorship by the Louisiana Department of Insurance and its mounting losses from Hurricane Ida.

As Lighthouse’s reinsurance broker and longtime partner to the White Family, TigerRisk had special knowledge of and access to information about Lighthouse’s financial problems, regulatory issues, and the involvement of Lawrence White in Lighthouse operations. Patrick White and TigerRisk were obligated to disclose these facts, but deliberately omitted them.

The White Family, White Family Trusts, and TigerRisk all financially benefited from the $65 million. Lighthouse’s subsequent liquidation led to thousands of homeowners in Florida and Louisiana losing their insurance coverage in Spring 2023.

In January 2023, TigerRisk Partners LLC and its affiliates were acquired by and became subsidiaries of Howden Group Ltd., a portfolio company of General Atlantic.

Fortinbras Enterprises LP et al v. Patrick White et al, Case No. 2024-CA-003337-O (Fla. Cir. Ct.) Fortinbras Enterprises LP et al v. TigerRisk Partners LLC et al, Index No. 651983/2024 (N.Y. Sup. Ct.)

About Fortinbras Enterprises Fortinbras Enterprises is an investment firm focused on credit.

CONTACT: Contact: Brad Bisca [email protected]

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Lighthouse streamlines a complicated false claims investigation.

Over the course of five months, Lighthouse delivered approximately 4,500 documents for review—out of the 2.3 million document review set—for a Fortune 100 health insurance provider.

Initial Document Population

Total Documents for Review

Total Data Reduction

The Challenge

• Complex internal False Claims Act investigation 
• 2.3M total documents for review
• Five-month timeline and tight budget

Lighthouse Key Actions

• Provided curated weekly deliveries of the most important, inclusive documents for review—with no redundant or duplicative versions
• Compiled summary reports of each delivery (including highlights of high-priority information) to expedite counsel review
• Out of 2.3M documents, identified and delivered just the 4,500 documents counsel needed to review in order to conduct a comprehensive legal analysis  

Key Results for Counsel

• Immediately gained a grasp on the relevant facts and timelines hidden within a massive review set—without wasting time reviewing irrelevant information 
• Quickly developed a deeper understanding of the underlying risks and nuances of the investigation, through consistent and iterative communication with Lighthouse search experts 
• Confidently completed the investigation on time and within budget—even after large volumes of new data were added mid-investigation 

A Challenging Internal Investigation into False Claims Act Violations 

A Fortune 100 health insurance provider was pursuing an internal investigation involving potentially improper diagnosis practices undertaken by a wholly-owned provider group. The scope of the investigation included analysis of reimbursements processed across 20+ disease categories, potentially triggering False Claims Act violations. With 2.3M documents to review, it was unclear how the internal investigation would be completed within a constrained budget and timeline. Counsel reached out to Lighthouse for help. 

Lighthouse Hands Counsel the Keys to a Focused, Efficient Investigation

A small team of Lighthouse information retrieval, legal, data science, and linguistic experts immediately began working with counsel to understand the specific allegations at issue, as well as catalogue the various sources of data that needed to be investigated. The team then designed and executed a battery of complex searches tailored to find instances of fraud or wrongdoing related to the allegations at hand. By staying in close communication with counsel, the Lighthouse team ensured that new search requirements and data sources were quickly integrated into the workstream to support fact development.

On a weekly basis, Lighthouse delivered a streamlined set of documents responding to counsel’s evolving theory of the case. These deliveries also included a detailed breakdown of the categories of documents identified each week, descriptions of relevant internal processes and policies, and flagging of high-priority documents of particular interest to counsel. Each delivery was distilled down to only the most inclusive, non-redundant versions of relevant documents. In addition to keeping pace with ongoing requests and deliverables, the Lighthouse team also re-executed previous searches to address waves of new data rolling in midway through the engagement.

A Faster and More Comprehensive Investigation Resolution 

Over the course of five months, Lighthouse delivered approximately 4,500 documents for review—out of the 2.3 million document review set. The Lighthouse deliveries encompassed everything counsel needed to know in order to resolve their investigation—and nothing more. The team accomplished this precision through deep subject matter expertise surrounding the allegations and underlying issues at play, consistent and effective communication with counsel, expert topic-based searching, and additional proprietary data analytics to remove unnecessary duplicative content.

By the end of their short engagement with Lighthouse, counsel had developed a comprehensive understanding of the pertinent risk areas and confidently completed their investigation—on time and within budget.

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Enka v Chubb

Uk supreme court clarifies how to determine which law governs an arbitration agreement in absence of an express or implied term.

Australia |  Publication |  November 2020

Introduction

The Supreme Court has brought welcome clarity to the English law approach to determining the law governing an arbitration agreement in its judgment in Enka Insaat Ve Sanayi A.S. (Respondent) v OOO Insurance Company Chubb (Appellant) [2020] UKSC 38. In summary, the Supreme Court ruled that if parties to a contract have not expressly or impliedly specified the law that governs their arbitration agreement, then the governing law of the contract (if specified) would apply. This is the case even if the seat is different to the governing law of the contract. But if the governing law of the contract is not specified, whether expressly or impliedly, then the arbitration agreement will be governed by the law most closely connected with the arbitration agreement. In general, that will be the seat of the arbitration. This article considers the reasoning of the Supreme Court judges as they worked through what has been an academically and practically contentious area of English law. This judgment was eagerly anticipated and reflecting that it was resolved on an expedited basis, with the appeal proceeding via both the Court of Appeal and the Supreme Court in a matter of months.    

Key prior cases

The English law approach to determining the governing law of an arbitration agreement has, since the Court of Appeal judgment in Sulamerica CIA Nacional de Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 638, been determined by reference to a three stage test: (i) an express choice of law; (ii) an implied choice or (iii) the law with the closest and most real connection with the arbitration agreement. In the years following Sulamerica, courts and practitioners alike have differed in analyses of points (ii) and (iii). A key dividing question has been whether an express choice of the law governing the substantive contract could amount to an implied choice of the law governing the arbitration agreement, or whether the law of the seat of arbitration would, as the law most closely connected, govern the arbitration agreement. 

This line of authority was further developed in the recent 2020 Court of Appeal judgment of Kabab-Ji S.A.L. v Kout Food [2020] EWCA Civ 6. The Court of Appeal held that a governing law clause reading “[t]his Agreement shall be governed by and construed in accordance with the laws of England” was also an express choice of law governing the arbitration agreement as a matter of construction of the particular terms of the contract and the arbitration clause in that case. 

Facts 

The claimant, Enka Insaat Ve Sanayi AS ( Enka ), entered into a subcontract with CJSC Energoproekt for certain works relating to the construction of a power plant in Russia. The subcontract contained an arbitration agreement requiring all disputes in respect of the subcontract to be referred to international arbitration seated in London and conducted under the ICC Rules. However, the subcontract contained no express choice of law governing the substantive contract nor the arbitration agreement. A fire erupted at the Plant causing significant damage. The owner of the Plant received 21.6 billion Roubles with respect to the damage under its insurance policy with the first defendant, OOO “Insurance Company Chubb” ( Chubb ). By doing so, Chubb became subrogated to any rights the owner had against Enka or others in respect of liability for the fire. Chubb argued that Enka was responsible for the fire due to allegedly low-quality of works provided by Enka. In 2019, Chubb commenced proceedings in the Moscow Arbitrazh Court against Enka and 10 co-defendants. As a result of this, Enka issued an Arbitration Claim in the Commercial Court in London seeking a declaration that Chubb was bound by the arbitration agreement in the subcontract, and sought an anti-suit injunction restraining Chubb from continuing the Russian Proceedings on the basis that they violated the arbitration agreement. Enka asserted that the arbitration agreement was governed by English law. At first instance, the Commercial Court held that the Moscow Arbitrazh Court was the appropriate forum to determine the scope of the arbitration agreement and refused the injunction on forum non conveniens grounds. The Court of Appeal overturned that decision and held that, in the absence of an express choice of governing law of the arbitration agreement, the governing law is the law of the seat – the choice of seat also amounting to an implied choice of governing law of the arbitration agreement – and granted the anti-suit injunction. In his reasoning, Popplewell LJ referenced the Kabab-Ji case, and sought to achieve clarity by setting out a default rule. Firstly, he noted that an express choice of the law of the arbitration agreement may be found in the arbitration agreement itself, alternatively in the express choice of law governing the substantive contract, or in a combination of such express choice with the terms of the arbitration agreement, properly construing the contracts. In all other cases, the governing law of the arbitration agreement is the law of the seat “ as a matter of implied choice, subject only to any particular features of the case demonstrating powerful reasons to the contrary ” ([2020] EWCA Civ 574, para 91).  The Supreme Court, in a split decision of 3:2, disagreed with Popplewell LJ’s reasoning, interpretation of the authorities and default rule, and substituted their own versions of clarity in this long disputed area of law. 

The majority judgment

• the seat is the legal place of performance of the arbitration; 
• this approach is consistent with international law and legislative policy; 
• to the default rule upholds reasonable expectations of contracting parties who specify a seat of arbitration without turning their minds to a governing law clause; and 
• this approach provides legal certainty and predictability in the absence of choice. 

The dissenting judgment

Given the narrow majority, it is also worth briefly covering the dissenting judgment. Lord Burrows delivered the dissenting judgment with whom Lord Sales agreed. Lord Burrows agreed with the majority that where parties have expressly or impliedly chosen the law of the contract then that choice applies to the arbitration agreement. His dissent concerned how and when an express or implied choice had been made, and the default position in the absence of an express or implied choice.  Lord Burrows agreed that where there has been no express choice of law governing the arbitration agreement the starting point for the analysis should be to assess the law with which the arbitration agreement is most closely connected. He held that the law with which the arbitration agreement is most closely connected must be the law with which the substantive contract is most closely connected.  Unlike the majority, Lord Burrows started by applying the Rome I Regulation (which is the EU and therefore English conflict of law rules) to determine the law governing the substantive contract. Applying Rome I, he found that the contract was governed by Russian law. On his reasoning, it therefore followed that the law most closely connected with the arbitration agreement was also Russian law.  The question of validity of the arbitration agreement under Russian law did not specifically arise in this case, and the dissenting judgment offered no substantive comment on whether their assessment would alter if the arbitration agreement would be invalid as a matter of Russian law. In obiter, Lord Burrows suggested that a narrow approach to this question would be preferred, agreeing with written submissions by Enka’s counsel that “ It is impossible to say that just because Russian law takes a narrower view of AAs than English law does … that the parties must have intended English law to apply. That is results-based reasoning that ignores the fact that there are legitimate reasons for adopting a narrower approach ”.

The dissenting judgment agreed with the majority that questions of granting an anti-suit injunction do not depend on the law governing the arbitration agreement, rather whether pursuing the foreign proceedings is a breach of the arbitration agreement. Given that they had concluded that Russian law governs the arbitration agreement, they held that they would remit to the Commercial Court the question of whether, applying Russian law, there had been a breach justifying the grant of an anti-suit injunction. 

This dissenting judgment of Lord Burrows and Lord Sales highlights that there remains diverging views within the judiciary which will no doubt continue to be debated in the arbitration community.

Conclusion 

The Supreme Court decision in Enka is an important development of English arbitration law, and one worthy of note for all commercial parties who choose to include arbitration agreements in their contracts. However, in practice, good drafting has always prescribed expressly stating both the choice of governing law of the substantive contract as well the governing law of the arbitration clause. Failure to specify both has the potential to lead to disputes and extensive satellite litigation as evidenced in this case. With this recent Supreme Court judgment, however, there is now greater certainty as to how such disputes will be resolved. 

With thanks to Aman Tandon, trainee, for his contribution to this article.   

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• MoSCoW Method

What is the MoSCoW Method?

The MoSCoW Method is a prioritization tool that helps professionals in managing their time and effort .

To do so, it proposes to classify the importance of the different characteristics of a product (or a Project) according to their importance .

Its name is an acronym of the 4 Prioritization Categories proposed (adding two “o”):

• M ust Have .
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Four Prioritization Categories

Must Have : Essential Requirements that the product or project must have.

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MoSCoW Method example

Imagine that you have been hired to create a Website for a Law firm.

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As we usually say, this Method may seem obvious.

Then… Why is it important?

Why is the MoSCoW Method important?

Many of professionals end up wasting time , effort and resources on useless task s that are ultimately not essential at all.

Surely you have experienced this situation working in a Team:

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As you can imagine, this Tool can be employed in practically all kinds of situations.

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When should you use the MoSCoW Method?

We highly recommend to use the MoSCoW Method:

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Now, let’s see more examples:

MoSCoW Method examples

We have chosen different real examples where the MoSCoW Method can be of great help for the development of certain products.

Let’s begin:

A Wallet - MoSCoW Method example

Let’s imagine that you are developing a wallet .

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Making a Cake - MoSCoW Method example

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You are now an artist hired to Design a poster for a Rock concert.

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• The name of the city.
• The maximum capacity of the stadium
• At what time each band will play.

Summarizing

The MoSCoW Method is a prioritization tool that helps professionals in managing their time and effort.

It proposes to classify the importance of the different characteristics of a product in 4 Categories :

• M ust Have.
• S hould Have.
• C ould Have.
• W on’t Have.

Although this Method can be used in all kinds of situations, we highly recommend to use it:

• When working in a team .
• In Design tasks .
• When there is a close deadline .
• With modular products or projects .
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The next chapter: Lighthouses shape the Fourth Industrial Revolution

Five years after its founding, the Global Lighthouse Network , a World Economic Forum initiative in collaboration with McKinsey & Company, is no longer a vision but a proven reality. Network-designated Lighthouses can now be found across the globe. They represent every manufacturing sector and span more than 140 use cases and 130 member sites.

Global Lighthouse Network members have shaped the story up to this point, and their experience provides the foundation for the next chapter . What will it look like? To find out, we took a pulse check of both Lighthouses and non-Lighthouses to understand their experiences and priorities. Analysis of data drawn from the survey responses of leaders of 36 companies across the globe that represent a range of manufacturing industries has provided powerful insights.

Network-designated Lighthouses can now be found across the globe. They represent every manufacturing sector and span more than 140 use cases and 130 member sites.

Scaling across production networks and beyond: The high-impact lever

The second chapter of the Fourth Industrial Revolution has begun amid global disruption, marked by the increasing impact of climate change, inflation, soaring energy prices, supply chain volatility, and talent shortages. Confronting these challenges successfully requires manufacturers to meet a new scaling imperative not only within their own networks but also in collaboration up and down the entire value chain.

The results of our survey of Lighthouses and non-Lighthouses has revealed that productivity, sustainability, and resilience are the top three strategic priorities among respondents across all industries and regions. Two-thirds of respondents believe that scaling the Fourth Industrial Revolution is highly important for achieving these priorities. The next chapter of the Fourth Industrial Revolution, then, will chronicle the stories of successful scaling.

Scaling reality check: Revealing the truth

Executives often expressed confidence at the outset of the Fourth Industrial Revolution, but a look at the current status of scaling progress provides a crucial reality check. Consider that among surveyed leaders of non-Lighthouses, an average of only 7 percent of the companies’ production networks are considered advanced in the use of Fourth Industrial Revolution technologies. This is where the performance gap begins to emerge clearly between those companies and Lighthouses. Leaders of Lighthouses, on average, consider 20 percent of their production networks to be Fourth Industrial Revolution advanced.

That said, a second figure makes it clear that Lighthouses are doing something different. Unlike non-Lighthouses, their adoption of the Fourth Industrial Revolution is ahead of plan. Regarding reported progress in scaling Fourth Industrial Revolution tech across multiple locations, Lighthouses are leading non-Lighthouses by a wide margin. And leaders of Lighthouses are more realistic than their peers about timing, with longer estimates for how long scale-up across at least half of their production networks will take.

Writing the scaling success story

What prevents scaling of the Fourth Industrial Revolution across production networks? Survey respondents agreed that external factors, such as supply chain snarls and inflation, matter. They also report that a lack of resources and capabilities constitute a major internal challenge. But leaders of Lighthouses more readily acknowledge the criticality of strategy for successful scaling—knowing what they are solving for, with goals aligned to business priorities.

The difference here is stark, with leaders of Lighthouses identifying the lack of a strategy as a key challenge nearly three times more often than those of non-Lighthouses do. Is the implication that Lighthouses lack strategy? No. Lighthouses still achieve three times the amount of non-Lighthouse scaling of Fourth Industrial Revolution tech. Instead, this finding suggests that Lighthouses are far more aware of the need for optimal strategy. Also, Lighthouse leaders are less likely than those of non-Lighthouses to report leadership or investment gaps, which may give Lighthouses an edge in turning strategy into reality.

Recognizing key enablers

The awareness gap between Lighthouses and non-Lighthouses becomes even wider for the key enablers to successful scaling of Fourth Industrial Revolution tech. For surveyed Lighthouse leaders, the key enablers are overwhelmingly about people. Five other enablers—industrial Internet of Things (IoT) stack, agile approach, tech ecosystem, agile digital studio, and industrial IoT academy—are viewed as considerably lower impact, together comprising the reported top enablers for fewer than one-fifth of respondents.

By contrast, among surveyed non-Lighthouse leaders, there is an outsize emphasis on one factor above all others: half list an agile approach as the top enabler. A combined 20 percent list either a tech ecosystem or an agile digital studio as the primary enabler. Only a combined 30 percent of non-Lighthouses leaders report workforce engagement (20 percent) and a transformation office (10 percent) at the top of their enabler lists—a difference in focus that may account for the gap in scaling success.

Scaling waypoints: Ready for others to follow

The experiences of Global Lighthouse Network companies have left waypoints to scaling Fourth Industrial Revolution tech in place. Non-Lighthouses now have a choice. They can do their own pathfinding, replicating the trials and errors already overcome by the Lighthouses. Or they can use the “smart follower” strategy, learning from leading companies’ use cases and methodologies to accelerate their progress and using the scaling waypoints that the Lighthouses have put in place.

Non-Lighthouses now have a choice. They can do their own pathfinding, replicating the trials and errors already overcome by the Lighthouses. Or they can use the ‘smart follower’ strategy.

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The scaling imperative for industry 4.0

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• Human hypofunctional NCF1 variants promote pulmonary fibrosis in the bleomycin-induced mouse model and patients with systemic sclerosis via expansion of SPP1+ monocytes-derived macrophages
• Article Text
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• http://orcid.org/0009-0008-3132-9200 Xinran Yuan 1 , 2 ,
• http://orcid.org/0000-0001-7655-2635 Xiaodong Qin 3 ,
• Kenji Takemoto 1 ,
• Jian Zhao 1 ,
• Matthew Sanderson 1 ,
• Yu Zhang 1 ,
• Kristi L Helke 4 ,
• Bethany Jacobs Wolf 5 ,
• Joel M Guthridge 6 ,
• http://orcid.org/0000-0002-9574-7355 Judith A James 6 ,
• Xiaodong Zhou 7 ,
• http://orcid.org/0000-0002-8059-9978 Shervin Assassi 7 ,
• http://orcid.org/0000-0002-6750-6407 Carol Feghali-Bostwick 1 ,
• Dandan Wang 2 ,
• http://orcid.org/0000-0002-8563-2036 Lingyun Sun 2 ,
• http://orcid.org/0000-0001-7938-5975 Betty P Tsao 1
• 1 Division of Rheumatology and Immunology, Department of Medicine , Medical University of South Carolina , Charleston , South Carolina , USA
• 2 Department of Rheumatology and Immunology , Nanjing University Medical School Affiliated Nanjing Drum Tower Hospital , Nanjing , Jiangsu , China
• 3 Department of Orthopedic Surgery , Nanjing University Medical School Affiliated Nanjing Drum Tower Hospital , Nanjing , China
• 4 Department of Comparative Medicine , Medical University of South Carolina , Charleston , South Carolina , USA
• 5 Department of Public Health Sciences , Medical University of South Carolina , Charleston , South Carolina , USA
• 6 Arthritis and Clinical Immunology , Oklahoma Medical Research Foundation , Oklahoma City , Oklahoma , USA
• 7 Division of Rheumatology , The University of Texas Health Science Center at Houston , Houston , Texas , USA
• Correspondence to Dr Betty P Tsao; tsaob{at}musc.edu

Objective We assessed the role of a systemic lupus erythematosus causal hypofunctional variant, neutrophil cytosolic factor 1 ( NCF1)- p.Arg90His (p.R90H) substitution, in systemic sclerosis (SSc).

Methods Association of NCF1 -H90 with SSc was performed in case–control cohorts, bleomycin (BLM)-treated Ncf1 -R90 C57BL/6 wildtype and Ncf1 -H90 knock-in (KI) littermates. Peripheral blood mononuclear cell (PBMC) subsets were analysed by cytometry by time-of-flight.

Results The NCF1 -H90 allele is associated with risk for diffuse cutaneous SSc (dcSSc) in Chinese and European Americans, and lung fibrosis in Chinese patients with SSc (OR=2.09, p=7.96E−10). Low copy number of NCF1 associated with lung fibrosis in European Americans (OR=4.33, p=2.60E−2). BLM-treated KI mice demonstrated increased pulmonary fibrosis, exhibiting activated type I interferon signature, elevated Spp1 , Ccl2, Arg1, Timp1 and Il6 expression, enriched macrophage scores in lung tissues. In a longitudinal observation cohort, homozygous H90 patients with SSc at baseline had increased anti-nuclear antibody titres, anti-topoisomerase antibody seropositivity and anti-centromere antibody seronegativity, increased incidence of lung fibrosis and Gender-Age-lung Physiology index, elevated modified Rodnan Skin Score (mRSS) and elevated plasma osteopontin (OPN, SPP1), CCL2, ARG1, TIMP-1 and IL-6. These H90 patients with SSc sustained elevated mRSS during follow-up years with decreased survival. The 0, 1 and 2 copies of H90 carriage in SSc PBMCs exhibited dose-dependent increases in profibrotic CD14 + CD68 + CD11b + Tim3 + monocytes. Elevated OPN, CCL2 and ARG1 in CD68 + CD11b + monocyte-derived macrophages from H90 patients were decreased after co-culturing with anti-CCL2 antibody.

Conclusion Low NCF1 activity increases the risk for the development of dcSSc and lung fibrosis via expanding profibrotic SPP1 + MoMs in a CCL2-dependent manner, contributing to the severity of lung fibrosis in both BLM-treated mice and patients with SSc.

• Scleroderma, Systemic
• Pulmonary Fibrosis
• Polymorphism, Genetic

Data availability statement

All data relevant to the study are included in the article or uploaded as supplementary information.

https://doi.org/10.1136/ard-2024-226034

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Handling editor Josef S Smolen

X @ShervinAssassi

XY, XQ and KT contributed equally.

Contributors BPT, LS and CF-B designed the study. SA, XZ and XX provided the DNA samples of patients with systemic sclerosis (SSc). XY, KT, YZ and MS conducted the animal experiments. KLH provided histology assessment of mouse lung tissues. JZ performed genotyping and association studies. XY and XQ performed the longitudinal study of patients with SSc. XY, XQ and DW performed the cytometry by time-of-flight and in vitro experiments for patients with SSc. XY, XQ and BJW analysed data and performed statistical analyses. BPT, XY and XQ drafted the manuscript. All authors edited and reviewed the manuscript. BPT is responsible for the overall content as guarantor.

Funding This work was supported by the National Scleroderma Foundation (grant to BPT), NIH R21 AR081933-01A1 (grant to BPT), MUSC COMETS-PPG (grant to BPT) and NIH/NIAMS R01 AR081280 (grant to SA).

Competing interests None declared.

Patient and public involvement Patients and/or the public were not involved in the design, or conduct, or reporting, or dissemination plans of this research.

Provenance and peer review Not commissioned; externally peer reviewed.

Supplemental material This content has been supplied by the author(s). It has not been vetted by BMJ Publishing Group Limited (BMJ) and may not have been peer-reviewed. Any opinions or recommendations discussed are solely those of the author(s) and are not endorsed by BMJ. BMJ disclaims all liability and responsibility arising from any reliance placed on the content. Where the content includes any translated material, BMJ does not warrant the accuracy and reliability of the translations (including but not limited to local regulations, clinical guidelines, terminology, drug names and drug dosages), and is not responsible for any error and/or omissions arising from translation and adaptation or otherwise.

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