Evercore ISI analysts have updated their estimate of the potential insurance and reinsurance market impact from the Los Angeles and Southern California wildfires, saying they believe the total could reach $20 billion to $25 billion, higher if the situation does not improve, while also suggesting the fires may be treated as one event for reinsurance […]

Gallagher Re is the first reinsurance broker to publicly provide a provisional industry loss estimate for wildfires impacting the Los Angeles and Southern California region, saying that total aggregated insured losses, largely from the Palisades and Eaton fires, are “expected to notably exceed USD10 billion.”

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Insurer Mercury General Corporation has said that it expects the ongoing wildfires in Los Angeles, California will result in losses for the company that will exceed its reinsurance retention of $150 million.

2024 was another record issuance year for the catastrophe bond market and with total alternative reinsurance capital reaching new heights, the way insurance-linked securities (ILS) managers and investors matched appropriate risk returns was a notable success, according to Bill Dubinsky, Managing Director and CEO of Gallagher Securities.

With loss estimates for the Los Angeles, California wildfires having risen, there is now likely to be “considerable attachment erosion” for some aggregate catastrophe bonds that hold exposure to the wildfire peril, Florian Steiger, CEO of Icosa Investments AG has said.

High-demand for catastrophe bond investments has compressed risk spreads somewhat, resulting in the overall yield of the catastrophe bond market falling back into single digits at 9.94% by the end of December 2024, according to the latest data from Plenum Investments.

Overnight, more details on the scale of the devastation caused by the wildfires burning in the Los Angeles region of California have emerged, with officials saying 10,000 structures have been destroyed across the two main fires, while estimates of losses continue to rise.