US property and casualty insurers slide as Los Angeles wildfire losses mount (updated)

Chubb

10/01/2025 13:26

(Adds analyst comments in paragraphs 5,6,7,12; Updates prices
in paragraphs 8-9)
    By Manya Saini
       Jan 10 (Reuters) - U.S. property and casualty insurance
stocks slid in premarket trading on Friday on worries over the
billions of dollars in potential catastrophe-related claims from
the wildfires menacing Los Angeles, California. 
    The Palisades Fire between Santa Monica and Malibu on the
city's western flank and the Eaton Fire in the east near
Pasadena already rank as the most destructive in Los Angeles
history, consuming more than 34,000 acres (13,750 hectares) - or
some 53 square miles - and nearly 10,000 structures, turning
entire neighborhoods to ash.
    J.P.Morgan doubled its forecast of insured losses to over
$20 billion. 
    "We expect insured losses to run well into the billions of
dollars, given the high value of homes and businesses in the
affected areas, and to cause large losses for P&C insurers with
significant homeowners and commercial property market share in
Los Angeles," Moody's Ratings said in a note. 
    "It will take weeks or months to determine the magnitude of
the insured damages, but the Los Angeles wildfires are likely
among the most costly wildfires in the state's history," it
added.    
    Raymond James sees insured losses in the range of $11
billion to $17.5 billion and said the disaster could become the
costliest wildfire in United States history. Analysts at
Morningstar DBRS pegged insured losses in excess of $8 billion,
based on preliminary estimates. 
    Sector bellwether Travelers  TRV.N  fell 4% before the bell.
Mercury General slumped 32%, while Allstate  ALL.N , Chubb
 CB.N  and AIG  AIG.N  dropped between 4.5% and 6%. 
    European insurers also traded lower with Beazley  BEZG.L ,
Lancashire  LRE.L  and Hiscox  HSX.L  fell between 2% and 4% and
were among the biggest losers across UK-listed large and
midcaps.  .FTLC .  
    The Pacific Palisades area is one of the most expensive
neighborhoods in the U.S., home to Hollywood A-Listers and
multimillion dollar mansions. Ahead of this week's disaster, its
insurance costs were among the most affordable in the country,
according to a Reuters analysis. 
    But that is likely to change after the scale of losses
anticipated in the wildfires now ringing Los Angeles, as well as
regulatory changes enacted late last year, four analysts told
Reuters earlier this week.
    "While leading U.S. property insurers are in good financial
condition, the California property insurance market has been
challenging... leading many insurers to re-think their product
offering, including an outright exit from the market,"
Morningstar DBRS wrote in a client note. 
   

 (Reporting by Manya Saini in Bengaluru; Additional reporting by
Sruthi Shankar; Editing by Krishna Chandra Eluri)
 ((Manya.Saini@thomsonreuters.com; X: manya__saini;))