(Reuters) – U.S. property and casualty insurance stocks fell in premarket trading on Friday after wildfires threatening Los Angeles killed at least 10 people and devoured nearly 10,000 buildings, with five fires burning out in a third night.
The Palisades Fire between Santa Monica and Malibu on the city’s west flank and the Eaton Fire to 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 as a result of the disaster, which analysts say will be California’s most expensive ever.
“We expect that insured losses will be well into the billions of dollars given the high values of homes and businesses in the affected areas, and that this will cause large losses for property and casualty insurers with significant homeownership and market share in the commercial real estate market in Los Angeles,” according to Moody’s Ratings. said in a note.
Analysts at Mornginstar DBRS estimate insured losses of more than $8 billion, based on preliminary estimates. JP Morgan expects losses could reach $10 billion.
Sector bell Passenger traffic fell by 4% before the bell. Mercury General fell 32%, while Allstate, Chubb and AIG fell between 4% and 6%.
European insurers also traded lower, with Beazley, Lancashire and Hiscox all down around 3%, the three biggest losers among Britain’s listed large and midcaps.
The Pacific Palisades area is one of the most expensive neighborhoods in the US, home to Hollywood A-Listers and million-dollar mansions. Before this week’s disaster, 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 expected from the wildfires now engulfing Los Angeles and regulatory changes implemented 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)