Beazley, the specialist re/insurer with a focus on Lloyd’s, has announced an estimate of its potential losses from the recent California wildfires, putting them at $40 million, after accounting for reinsurance.
The wildfires are set to hit specialty underwriters like Beazley hard, given they could have exposure across a number of business lines and areas of their business.
The Lloyd’s of London insurance and reinsurance market is expected to take a reasonable share of the costs from the wildfire as well, as these risks have been well-diversified including among Lloyd’s syndicates and especially through reinsurance programs.
Beazley said this morning that its board’s early estimate for the level of insured claims it will bear arising from the 2018 California wildfires is $40m, net of its reinsurance arrangements.
The Camp and Woolsey wildfires in California have destroyed more than 20,000 structures between them, after springing up in California’s Butte and Ventura counties, respectively, on November 8th.
They burnt a combined total of 250,000 acres and the Camp Wildfire is now officially the deadliest as well as the most destructive wildfire on record, after claiming at least 85 lives.
Recent industry loss estimates from Moody’s suggest that insured losses from both wildfires will be between $10 billion and $15 billion, while RMS said $9 billion to $13 billion, and CoreLogic put economic losses at $15 billion to $19 billion.
The hit for Beazley from these wildfires won’t be that significant on its own, but added to other losses the re/insurer will have taken from 2018 catastrophe events it will be a further dent to full-year results.
The firm has been growing its premiums underwritten through 2018, in response to the improved rate environment. We’d expect more of the same in 2019, as rates are likely to rise at least as much as seen this year and Beazley almost certain to take advantage at renewals.
Beazley also said today that its investment return for the year-to-date now stands at just 0.5%, equivalent to $27 million, blaming volatile investment markets for denting this side of its balance-sheet.
Investment returns are set to be dented after recent market volatility, meaning this financial lever will not be as effective at countering recent loss experience for many re/insurers.