catastrophe losses

In light of the recent Los Angeles wildfires, catastrophe bond fund manager Icosa Investments has called for the re/insurance industry to move beyond the categories of “peak” and “secondary” perils, warning of implications for cat bonds and investors amid rising losses from these types of events.

Hannover Re’s Chief Executive Officer (CEO), Jean-Jacques Henchoz, has said that an industry loss ranging between $30 billion and $40 billion from the Los Angeles, California wildfires, could result in a net loss of €500 million to €700 million for the German reinsurer, which is above its first-quarter large loss budget of €435 million.

US insurer Allstate expects its losses from the recent Los Angeles, California wildfires will be around $1.1 billion, pre-tax and net of reinsurance, which has implications for the erosion of aggregate Sanders Re catastrophe bond deductibles and may result in recoveries under its Nationwide excess-of-loss reinsurance tower.

Insurer USAA revealed today that it has received more than 3,500 claims related to the California wildfires, with 86% of claims receiving initial payments of more than $1 billion, with the company projecting that its members’ wildfire losses will reach roughly $1.8 billion.

According to Jean-Paul Conoscente, SCOR Global P&C CEO, if insurance and reinsurance market losses from the Los Angeles wildfires reach or surpass $40 billion, the retro market could potentially face significant disruption throughout 2025.

The mark-to-market impact to catastrophe bonds from the Los Angeles, California wildfires has risen, as a number of cat bond names saw further mark-downs on  pricing sheets last Friday, while some aggregate cat bonds saw negative movements that had not done so before.

Recent estimates suggest that insured losses from the Los Angeles, California wildfires could be higher than anticipated. As a result, catastrophe bond prices are showing signs of weakness, with the market’s benchmark recording its first-ever negative January return since its inception over two decades ago, according to cat bond fund manager Icosa Investments AG.

Everest Group, the global insurer and reinsurer, has estimated its pre-tax net catastrophe losses from the California wildfires at between $350 million and $450 million, which suggests a 1% of industry loss market share.

Executives at RenaissanceRe (RenRe), the Bermuda-based reinsurer and third party capital manager, have said that the California wildfires may drive underwriting opportunities for the industry at the mid-year renewals, while also stating that the company’s insurance-linked securities (ILS) structures and JV’s remain well-positioned following the event.

The Los Angeles, California wildfires are a tail event for the peril and will demonstrate the continued and growing relevance of reinsurance, according to RenaissanceRe CEO Kevin O’Donnell, who also explained today that “most of our US property catastrophe programs are loss impacted.”