Investing.com – Insured losses from the deadly Los Angeles wildfires could climb to $30 billion, according to estimates from analysts at Wells Fargo (NYSE:).
The fires have ravaged large areas of Los Angeles for six straight days, with firefighters still pushing to contain them. At least 24 people have died as a result of the fires, while thousands of homes have been destroyed and 100,000 people have been forced to evacuate, according to Reuters estimates.
California Governor Gavin Newsom has suggested that the wildfires, which officials say have leveled at least 12,300 structures and left whole neighborhoods in smoldering heaps, could amount to the largest natural disaster in US history.
Over the weekend, firefighters received a respite from the warm Santa Ana winds which have contributed to the fires and reached hurricane force last week. However, the winds were expected to return on Sunday night and last until Wednesday, Reuters reported, citing a National Weather Service forecast.
Meanwhile, analysts have been attempting to gauge the financial impact of the disaster, with private forecaster AccuWeather estimating that the damage and economic loss will be between $135 billion to $150 billion, Reuters reported.
Attention is also focusing on the insurance industry, particularly the catastrophe losses that will potentially be incurred by the segment in the first quarter.
In a note to clients on Sunday, the Wells Fargo analysts led by Elyse Greenspan said that, though the fires are ongoing, their “base case” was for insured losses of $30 billion. They added that potentially losses could also be between $20 billion to $40 billion.
Catastrophe losses have mounted in recent years, leading to substantial payouts related to property damage that have weighed on insurers’ results. Many of these companies have subsequently chosen to draw down their presence in areas that have a higher risk of natural disasters, such as California and Florida.
Shares in insurance names like Allstate (NYSE:), Travelers (NYSE:), and Los Angeles-based Mercury General (NYSE:) were lower in premarket trading on Monday. All three slumped in the prior session last week.
Other firms that could be exposed to the wildfires include AIG (NYSE:), Chubb (NYSE:) and Cincinnati Financial Corporation (NASDAQ:), Wells Fargo noted.
(Reuters contributed reporting.)
