Insurance stocks are selling off sharply as potential losses from the LA wildfires increase

Insurers exposed to California’s homeowner market sold sharply on Friday as the devastation caused by the Los Angeles wildfires spread.

Shares of All states And Chubb both fell 4% in morning trading, while AIG And Travelers fell by about 2% each. These four stocks were among the biggest losers in the S&P 500 on Friday morning.

According to JPMorgan, AllState, Chubb and Travelers are the most exposed carriers to insured losses from the wildfires. The Wall Street firm noted that Chubb could have particularly high exposure due to its focus on high-net-worth companies in the region.

This week’s devastating fires could become the costliest in California history. Insured losses from this week’s fires could exceed $20 billion, and the estimate could be even higher if the fires spread, JPMorgan estimated Thursday. These losses would far exceed the U.S.’s $12.5 billion in insured losses Campfire 2018According to Aon data, this was the most expensive fire in the country’s history.

Moody’s Ratings expected insured losses to reach well into the billions of dollars, given the high values ​​of homes and businesses in the affected areas.

The Palisades Fire is the largest of the five fires. It has burned and destroyed more than 17,000 hectares more than 1,000 structuresCalifornia authorities said. Pacific Palisades is an affluent area where the median home price is more than $3 million, according to JPMorgan.

Insurance companies have asked Southern California Edison to preserve evidence related to the devastating wildfires that have ravaged Los Angeles, according to a company declaration to regulators.

Certain reinsurers were also affected. Arch Capital Group And RenaissanceRe Holdings fell 2% and 1.5% respectively on Friday. JPMorgan believes that rising loss estimates increase the likelihood of reinsurance breaches across insurers.

— CNBC’s Spencer Kimball contributed reporting.