Particle.news
Download on the App Store
4 ARTICLES
·
3mo ago

State Farm Projects $7.6 Billion in Los Angeles Wildfire Losses

Reinsurance will significantly reduce the insurer's net losses, but financial challenges persist as S&P places its rating on negative watch.

This Pacific Palisades neighborhood in Los Angeles, seen here Feb. 3, was almost entirely destroyed by fire. State Farm, California's largest insurer, is reporting billions of dollars in losses from the Palisades and Eaton fires.
Image

Overview

  • State Farm estimates $7.6 billion in direct losses from the recent Los Angeles wildfires, the highest reported by any insurer so far.
  • The company has already paid $1.75 billion across approximately 9,500 claims, with total costs including administrative expenses reaching $7.9 billion.
  • Reinsurance from its parent company, State Farm Mutual, will reduce State Farm General’s net losses to $212 million, alongside a $400 million assessment for the California FAIR Plan.
  • State Farm General's financial surplus is expected to shrink by $400 million, prompting the company to request emergency rate hikes to stabilize its finances.
  • S&P Global Ratings has placed State Farm General’s AA financial strength rating on negative watch, citing weak underwriting performance and potential earnings pressure.