US property and casualty insurers slide as Los Angeles wildfire losses mount

(Reuters) – U.S. property and casualty insurers fell in premarket trade on Friday after wildfires threatening Los Angeles killed at least 10 people and engulfed nearly 10,000 buildings, with five fires burning for a third night.

The Palisades Fire between Santa Monica and Malibu on the west side of the city, and the Eaton Fire on the east near Pasadena, already rank as the most destructive fire in Los Angeles history.

Insurers are expected to face billions of dollars in damages from the disaster, which analysts estimate will be the costliest in California.

“We expect insured losses to be in the billions of dollars given the high value of homes and businesses in the affected areas, and significant losses for P&C insurers with a significant home and commercial property market in Los Angeles,” Moody’s Ratings said in the post.

Mornginstar DBRS analysts have estimated insured losses at more than $8 billion, with JP Morgan expecting losses to reach $10 billion.

Sector bellwether Travelers fell 4% before the bell.Mercury General fell 32%, while Allstate, Chubb and AIG fell between 4% and 6%.

European insurers also traded lower with Beazley, Lancashire and Hiscox all down around 3%, the three biggest losers in UK-listed large- and mid-caps.

The Pacific Palisades area is one of the most expensive neighborhoods in the U.S., home to Hollywood A-Listers and multimillion-dollar mansions.Before this week’s disaster, its insurance costs were among the cheapest in the country, according to a Reuters analysis.

But that is likely to change after the scale of losses expected in the wildfires currently raging in Los Angeles, as well as regulatory changes that took effect late last year, four analysts told Reuters earlier this week.

(Reporting by Manya Sain in Bengaluru; Additional reporting by Sruthi Shankar; Editing by Krishna Chandra Elluri)