Insurers are facing significant losses from the catastrophic Los Angeles wildfires — given the high value of homes and businesses in the affected communities. However, those losses are likely to be manageable for both insurers and their reinsurers, with preliminary estimates ranging from $10 billion to $15 billion, according to S&P Global Ratings.
“Significant wildfire losses in the first two weeks of 2025 could rapidly deplete the catastrophe budgets of U.S. primary insurers. This early strain may lead to earnings pressure later in the year, especially if 2025 proves to be above-average for catastrophes,” S&P said in its report, titled “Insurers Can Absorb Losses Amid Escalating Los Angeles Wildfires.”
“Although expected losses are steep, we believe many of our rated insurers have the capital resilience to absorb them, after strong results in the first nine months of 2024 (and likely for the year),” S&P continued. “Moreover, many major primary insurers in the admitted market, such as State Farm Mutual, Automobile Insurance Co., Allstate Corp., and Hartford Financial Services Group Inc., have either reduced exp