$30 billion in insured losses from LA wildfires ‘appears possible,’ says Wells Fargo By Investing.com
Investing.com – Insured losses from deadly Los Angeles wildfires could climb to $30 billion, analysts estimate Wells Fargo (NYSE:).
Fires have ravaged large areas of Los Angeles for six consecutive days, and firefighters are still trying to contain them. As a result of the fire, at least 24 people died, while thousands of homes were destroyed, and 100,000 people were forced to evacuate, Reuters estimates.
California Gov. Gavin Newsom has suggested that the wildfires, which officials say have leveled at least 12,300 structures and left entire communities in smoldering heaps, could be the worst natural disaster in US history.
Over the weekend, firefighters got a reprieve from the warm Santa Ana winds that fueled the fires and reached hurricane strength last week. However, the winds are expected to return on Sunday evening and last until Wednesday, Reuters reported, citing a forecast from the National Weather Service.
Meanwhile, analysts are trying to estimate the financial impact of the disaster, with private forecaster AccuWeather estimating the damage and economic loss to be between $135 billion and $150 billion, Reuters reported.
Attention is also focused on the insurance industry, particularly the catastrophe losses that segment will potentially suffer in the first quarter.
In a note to clients on Sunday, Wells Fargo analysts led by Elyse Greenspan said that while the fires continue, their “base case” was for insured losses of $30 billion. They added that potential losses could also be between $20 billion and $40 billion.
Catastrophe losses have increased in recent years, leading to substantial property damage payouts that have impacted insurers’ bottom lines. Many of these companies subsequently decided to reduce their presence in areas with a higher risk of natural disasters, such as California and Florida.
Shares of Los Angeles-based insurers Allstate (NYSE: ), Travelers (NYSE: ) and Mercury General (NYSE: ) were lower in premarket trading on Monday. All three fell in the previous session last week.
Other companies that could be exposed to the wildfires include AIG (NYSE: ), Chubb (NYSE: ) and Cincinnati Financial Corporation (NASDAQ: ), Wells Fargo noted.
