California wildfires hit insurance companies - Costs could reach $30 billion
The devastating wildfires that have ravaged Southern California over the past week could have caused insurance costs of up to $30 billion, according to a new analysis.
At least 24 people have been killed by wildfires raging in the greater Los Angeles area, while officials say over 12,000 structures have been damaged or destroyed by the flames.
Financial analysts at Wells Fargo Securities released a report to clients, which highlighted that insurance costs were expected to be around $30 billion, adding that total losses could fluctuate in a range between $20 billion and $40 billion.
Of that total, about 85% of losses are expected to come from homeowners insurance policies, while 13.5% are commercial property and 1.5% are personal auto losses, the Wells Fargo analysis found. The report noted that average property values range around $3 million in areas affected by the fires.
Under the base case of $30 billion in costs, $25.5 billion of that would come from homeowners insurance policies compared to $4.05 billion from commercial lines and $450 million from auto insurance policies. This would result in a capital loss of 1.6%.
Last week, JPMorgan analysts released a preliminary estimate that insurance losses would reach $20 billion. That figure would make the Southern California fires the most damaging in the state's history, similar to the $30 billion estimate from Wells Fargo.
The JPMorgan report noted that personal property losses amounted to about 86% of the total, compared with 12% for commercial property and 2% from all other lines and auto insurance.
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