AllState, Chubb, and Travelers face significant exposure to the devastating wildfires sweeping through Los Angeles, according to JPMorgan. The insured losses from this week's fires are projected to exceed $20 billion, potentially surpassing those from the 2018 Camp Fire, the costliest blaze in U.S. history. These fires could become the most expensive in California's history, having already consumed over 17,000 acres and destroyed more than 1,000 structures.
The fires have hit Pacific Palisades particularly hard, an affluent area with a median home price exceeding $3 million. The Palisades Fire is currently the largest among five active blazes. As these wildfires continue to spread, insurers exposed to California's homeowners' market are experiencing sharp declines in their stock values. On Friday morning, shares of AllState and Chubb dropped by 4%, while AIG and Travelers saw declines of about 2% each. These stocks were among the biggest losers in the S&P 500 during early trading. Furthermore, Arch Capital Group and RenaissanceRe Holdings also saw reductions of 2% and 1.5%, respectively.
JPMorgan suggests that the escalating loss estimates might breach reinsurance attachments at various insurers. Moody's Ratings has also projected that insured losses will run well into the billions, considering the high value of homes and businesses in the affected areas. This financial impact has prompted insurance companies to request Southern California Edison to preserve evidence related to the wildfires.
The estimated $20 billion in insured losses could greatly surpass the $12.5 billion in damages caused by the 2018 Camp Fire. That fire was previously recorded as the costliest blaze in the nation's history by Aon. With the current fires threatening to exceed those figures, the economic and environmental repercussions are expected to be significant.
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