U.S. primary insurance giant Travelers has estimated that the recent California wildfires could cost the insurer as much as $675 million in losses, after taking into account its reinsurance recoveries.
Travelers reported its estimate for losses from the California wildfires today in advance of its investor presentation, revealing an estimated range of loss of $525 million to $675 million pre-tax ($340 million to $440 million after-tax), including estimated recoveries from the firm’s reinsurance arrangements.
It’s even higher than fellow insurance giant AIG had estimated, as that firm is expecting a wildfire loss of around $500 million, pre-tax and net of reinsurance, from the California wine region fires.
With industry estimates pointing to the potential for these California wildfires to result in an impact to insurance and reinsurance markets of between $7 billion up to $10 billion now, the alternative capital and ILS market is destined to pay its share.
Travelers said that its estimate reflects “the high average replacement value of homes in the affected areas and a high incidence of total losses, which also include contents, other structures and additional living expenses: and also includes losses from its commercial insurance businesses, including its Agribusiness unit.
“The toll from one of the worst wildfire events in U.S. history is devastating,” commented Alan Schnitzer, Chairman and Chief Executive Officer. “Lives were tragically lost, property and personal possessions were destroyed and entire communities are now forced to start over. Our claim professionals are on the ground, and we’ll work tirelessly with our customers to help them and their communities recover as quickly as possible.”
The California wildfires will be the largest single insurance and reinsurance market loss event from the wildfire peril it now seems and so the biggest insurers are all likely to be heavily impacted, which could see them drawing on more reinsurance support as we go forwards following the heavy loss burden they’ve faced this year.
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