Wildfire cat bond news

The number of residential and commercial structures destroyed by the ongoing outbreak of three California wildfire events has risen again, suggesting an increasing level of loss for the insurance and reinsurance industry.

Equity analysts from investment bank Credit Suisse believe that ongoing California wildfire outbreaks could cost the insurance and reinsurance industry between $5 billion and $10 billion, although they do not believe this would be sufficient to push any of the major insurers they cover to a fourth-quarter loss.

The current California wildfire outbreak is expected to drive losses of between $3 billion to $6 billion to the insurance and reinsurance industry, while there will also be an element of BI and demand surge to deal with as well, according to Moody’s Investors Service.

The ongoing outbreak of wildfires in California, which have reached record levels in terms of property destruction and deaths, are likely to mean that insurance and reinsurance industry losses from the wildfire peril will also reach a record level in 2018, according to A.M. Best.

The valuations or prices of investments in the Stone Ridge Asset Management reinsurance mutual funds and the Markel CATCo listed retrocession fund were dented by the California wildfire threat in recent days.

The ongoing outbreak of wildfire activity in California has continued to destroy property over the last 24 hours, with the number of destroyed structures now standing at 7,150 across the three wildfire outbreaks and uncertainty still remaining over whether utility PG&E will be found liable for the most severe of the blazes.

Catastrophe bonds that are exposed to the California wildfire peril are expected to face increased levels of volatility and also discounts in their pricing on the secondary market due to the ongoing wildfire events in the state, according to investor Plenum.

The current outbreak of wildfire activity in California is now the most destructive on record and joint deadliest, with the Camp Fire now having destroyed more than 6,700 structures, while the Woolsey Fire has expanded further and as a result multi-billion dollar losses are to be expected for insurance, reinsurance and ILS market interests.

Update: Read our latest on the potential for multi-billion dollar losses from this fire outbreak. A northern California wildfire named the Camp Fire has destroyed more than one thousand homes and structures in less than 24 hours, with around 15,000 more threatened and the fire continuing to spread out of control.

The SD Re Ltd. (Series 2018-1) catastrophe bond transaction, which will be the second California wildfire cat bond covering third-party liability costs, has not grown in size while being marketed, remaining at $125 million while the pricing is expected to settle today at the middle of initial guidance.