Wildfire related news and analysis

Mercury, an insurer with a meaningful exposure to claims from the Los Angeles, California wildfires, said it estimates gross losses of $1.6 billion to $2 billion, but while significant reinsurance recoveries will be made the company noted that a parametric reinsurance arrangement is not expected to pay out.

US primary insurer Travelers has announced its preliminary estimate of catastrophe losses from the Los Angeles, California wildfires at $1.7 billion before-tax ($1.3 billion after-tax) and the company says these figures are net of reinsurance recoveries.

In the wake of recent devastating wildfires in California, Howden Re has called for reforms and action to encourage more risk capacity to help in closing the protection gap crisis in the state, saying that both traditional reinsurance and capital markets will be needed, as well as innovative risk transfer such as parametric solutions.

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.

Euler ILS Partners, the specialist insurance-linked securities (ILS) investment manager, has issued an updated event report for the California wildfires, saying it believes the insurance industry loss may sit between $23 billion to $33 billion.

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.