(Reuters) – U.S. property and casualty insurance stocks fell in premarket trading on Friday after wildfires menacing Los Angeles killed at least 10 people and devoured nearly 10,000 structures, with five fires burning into a third night.
The Palisades Fire between Santa Monica and Malibu on the city’s western flank and the Eaton Fire in the east near Pasadena already rank as the most destructive in Los Angeles history.
Insurers are expected to face catastrophe-related claims worth billions of dollars from the disaster, which analysts estimate will be the costliest ever in California.
“We expect insured losses to run well into the billions of dollars, given the high value of homes and businesses in the affected areas, and to cause large losses for P&C insurers with significant homeowners and commercial property market share in Los Angeles,” Moody’s Ratings said in a note.
Analysts at Mornginstar DBRS pegged insured losses in excess of $8 billion, based on preliminary estimates. J.P. Morgan expects the losses to reach as high as $10 billion.
Sector bellwether Travelers fell 4% before the bell. Mercury General slumped 32%, while Allstate, Chubb and AIG dropped between 4% and 6%.
European insurers also traded lower with Beazley, Lancashire and Hiscox all down around 3%, the three biggest losers across UK-listed large and midcaps..
The Pacific Palisades area is one of the most expensive neighborhoods in the U.S., home to Hollywood A-Listers and multimillion dollar mansions. Ahead of this week’s disaster, its insurance costs were among the most affordable in the country, according to a Reuters analysis.
But that is likely to change after the scale of losses anticipated in the wildfires now ringing Los Angeles, as well as regulatory changes enacted late last year, four analysts told Reuters earlier this week.
(Reporting by Manya Saini in Bengaluru; Additional reporting by Sruthi Shankar; Editing by Krishna Chandra Eluri)
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