Insurers operating in the California homeowners’ market experienced significant declines in their stock prices on Friday due to the widespread devastation caused by the Los Angeles wildfires. Allstate shares fell by 6%, while Chubb and Travelers saw declines of over 3%. These three companies were among the top losers in the S&P 500 for the day, with AIG and Progressive also dipping over 1%.
According to JPMorgan, Allstate, Chubb, and Travelers are the insurers most at risk for losses from the wildfires. The firm highlighted Chubb’s potentially high exposure due to its focus on high-net-worth clients in the region. The estimated insured losses from this week’s fires could exceed $20 billion, with the potential for even higher costs if the fires continue to spread, as estimated by JPMorgan on Thursday. These losses would surpass the $12.5 billion in insured damages from the 2018 Camp Fire, the costliest wildfire in U.S. history according to Aon data.
Moody’s Ratings anticipated insured losses to reach billions of dollars given the high property values in the affected areas. The Palisades Fire, the largest of the five blazes, has burned over 17,000 acres and destroyed more than 1,000 structures in the affluent Pacific Palisades area, where the median home price exceeds $3 million.
Insurance companies have requested Southern California Edison to preserve evidence related to the wildfires that have ravaged Los Angeles, as stated in a company filing to regulators. Certain reinsurers were also impacted, with Arch Capital Group and RenaissanceRe Holdings seeing declines of 2% and 1.5% on Friday. JPMorgan suggested that the increasing loss estimates raise the likelihood of reinsurance attachments at various insurers being exceeded.
— Reporting by CNBC’s Spencer Kimball.
