Insurance Stocks Plummet Amid Los Angeles Wildfire Concerns

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2 days ago
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The ongoing wildfires in Los Angeles have led to a significant sell-off in stocks of insurance companies tied to the California real estate market. Allstate (ALL, Financial) experienced a 4% drop in early trading, while American International Group (AIG), Chubb (CB), and Travelers (TRV) each saw approximately a 2% decline. These stocks were among the biggest losers in the S&P 500 index.

According to JPMorgan data, Allstate, Chubb, and Travelers are the most vulnerable to losses from fire insurance claims. The financial firm highlighted that Chubb's focus on high-net-worth assets in the Los Angeles area could increase its risk exposure significantly.

The destructive fires in Los Angeles this week might become the most costly in California's history. JPMorgan estimated on Thursday that insurance losses from the fires could exceed $20 billion, with potential for higher losses if the fires continue to spread. These projected losses would surpass the $12.5 billion in insurance losses from the 2018 Camp Fire, which was previously the deadliest and most destructive wildfire in California, devastating over 60,000 hectares and destroying nearly 19,000 homes and structures.

Disclosures

I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.