According to experts, the devastating wildfires in California will cost the insurance industry tens of billions. This also puts pressure on insurer stocks.
The insured damage could be similar to the wildfires in Northern California in 2017, the rating agency Standard & Poor’s (S&P) announced on Thursday evening (local time) in New York. This corresponds to around 16 billion US dollars (15.5 billion euros). However, the economic damage is likely to be much higher.
According to a preliminary estimate by the private US weather service AccuWeather, which also measures the impact of storms, the total damage and economic losses could be between 135 and 150 billion dollars (131 to 146 billion euros).
The estimate includes, among other things, the damage and destruction of thousands of houses and other buildings, the damage to infrastructure and the long-term costs of reconstruction, it said. Since the fires are not yet under control, the amount of damage could increase. According to media reports, around 10,000 buildings have been destroyed in the fires so far.
According to S&P, the insurance industry can absorb the expected burden. However, for primary insurers in the USA, the losses could already eat up the budgets that they have planned for the companies for the entire catastrophe losses for the year. As a result, they could come under pressure as the year progresses – especially if 2025 turns into a year with high catastrophe losses, the experts wrote.
According to a current study by the world’s largest reinsurer Munich Re, this definitely applies to the year 2024, which has just ended. The DAX group estimated the economic damage caused by natural disasters last year at $320 billion. Of this, primary insurers and reinsurers contributed $140 billion. Measured in terms of insured losses, 2024 was the third most expensive year since 1980. In terms of total losses, 2024 is in fifth place.
JPMorgan sees Travelers particularly affected
JPMorgan saw losses related to the current fires mostly limited to the home insurance businesses of Allstate, Travelers and Chubb. In addition, the commercial real estate businesses of Travelers, AIG and Chubb are also expected to be affected, but to a lesser extent.
Based on a preliminary assessment of the affected area and historical events, insured losses from this fire could reach $10 billion, with primary insurers more affected than reinsurers, the statement said.
Due to current events, Travelers shares fell 4.02 percent to $233.00 in premarket NYSE trading. Allstate also fell 6.16 percent to $179.99, while AIG shares lost 3.61 percent to $68.85 and the shares lost 3.62 percent to $257.
Editorial staff at finanzen.net with material from dpa-AFX
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