An overhead pole camera image shows wildfire damage to an Altadena Drive street sign and home destroyed by the Eaton Fire in Altadena, Los Angeles County, California on January 14, 2025.
Patrick T. Fallon | Afp | Getty Images
As Los Angeles continues to battle wildfires that have ravaged swaths of the city, insurers exposed to the California homeowners market could face an earnings hit up to 20%.
Wall Street firms Goldman Sachs and Wells Fargo have already hiked their original estimates for insured losses as the devastation of the wildfires spread — seeing as much as $30 billion for the insurance industry. Those losses would far surpass the $12.5 billion in insured damages from the 2018 Camp Fire, which was the costliest blaze in the nation’s history, according to data from Aon.
The current fires occurred in areas that are more densely populated with higher property values, particularly hurting insurance providers with a high-net-worth focus, BofA said.
The Palisades Fire is the largest of the five blazes. It has burned more than 17,000 acres, destroying more than 1,000 structures, according to California authorities. The average home price in Palisades is $3.5 million, according to Jefferies.
Bank of America expects that high-net-worth specialists such as Chubb and Cincinnati Financial will likely be more exposed to the fire losses in the Pacific Palisades. Shares of Chubb lose 5.1% and 4.6% last week, respectively.
Cincinnati Financial could suffer from a 20% earnings-per-share decline in 2025 because of the insured losses, per BofA. Chubb, Everest and Travelers could also experience a double-digit percentage drop in EPS, the bank added.
The firm said middle market national insurance underwriters such as Progressive shouldn’t be too exposed.
The Palisades and Eaton fires erupted on the city’s western and eastern flanks, respectively during last week’s intense winds. At least 24 people have died, but the death toll will likely rise, officials said, as crews carry out house-to-house searches in burnt-out neighborhoods.
Oppenheimer identified the top six public carriers in California whose combined homeowners market share is 20%. Mercury General, whose shares have fallen 22% this month, is estimated to have the biggest market share of 6.5%.
