Wildfire
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Jonathan Rinderknecht was arrested Tuesday on destruction of property charges. -
The model becomes the second in the state to get approval to affect ratemaking applications.
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Mercury’s recovery from the guaranteed percentage of losses is $47mn.
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This comes in at the lower end of the initial spread guidance of 725-775 bps.
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The Californian insurer had a private deal, Randolph Re, that provided pure wildfire protection.
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Up to nine million acres of US land are considered likely to burn.
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The CEO said private ILS funds can generate additional returns of 10%-20%.
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Private ILS would benefit from extension spreads to manage investor concerns, the CEO argued.
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The insurance industry has experienced mounting losses from severe convective storms.
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Premiums ceded to the ILS vehicle increased by 76% to $433mn.
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Commissioner Lara also proposed a $500mn cash infusion from parent State Farm.
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Island appetite remains stable, but early 2025 loss activity has injected fresh uncertainty.
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The bond was trading at around 12.3c on the dollar in the secondary market last month.
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“We do not have the luxury of time,” he said during the Bermuda Risk Summit.
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This came as the market’s underwriting profit dipped 10% for 2024.
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There is the potential for cat bond H1 issuance to be a record breaking six months.
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As of 14 February, the company received 405 claims.
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The London D&F market will shoulder most of the losses.
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The reinsurer pegged the market loss at $40bn.
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The carrier pegged its LA wildfire losses at EUR140mn.
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Dispersion of returns was high, with the range 0.87% to -3.71%.
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The programme structure was expanded, but it is unclear what percentage was placed.
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The cost of reinstatement was included in $170mn wildfire net loss figure.
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Climate change and other loss impacts were not adequately incorporated, sources said.
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State Farm General has asked California regulators for an emergency rate increase.
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Hurricane Milton accounted for 60% of the firm’s Q4 large loss tally.
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The carrier expects the market loss to land at $35bn-40bn.
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The carrier has paid $1.75bn on around 9,500 claims filed from the wildfires.
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The carrier estimated January cat losses of $1.08bn, or $849mn after-tax, including the fires.
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Wildfire loss ‘serves as a strong reminder not to unwind hard-fought for rates and terms’, the executive said.
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The carrier said 72% of those losses occurred in personal property.
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A higher loss quantum will put a greater burden on retro programmes.
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The estimate is net of its per-occurrence reinsurance program and gross of tax.
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Insurers have paid $6.9bn in Southern California wildfire claims in the first four weeks of recovery.
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The loss aggregator has classified the fires as two separate events for reinsurance purposes.
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Wildfire is rarely singled out as an exposure that can shift portfolio outcomes.
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The fall marks this the first time in 20 years the index has been negative in January.
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More than 33,000 claims had been filed as of 5 February.
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The firm will match segregated accounts of portfolios to investor mandates.
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The carrier is “extremely well capitalised” to achieve its strategic ambitions.
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The insurer disclosed the estimates as it seeks emergency rate hikes from regulators.
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The company will ‘aggressively pursue subrogation’ for the Eaton Fire.
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The LA fires ‘demonstrate the magnitude of tail events not well captured in modelling’.
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Ultimate losses from the Palisades, Eaton and Hurst fires are estimated at $4bn.
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The LA-based firm estimated gross cat losses in the range of $1.6bn-$2bn.
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The carrier’s reinsurance premiums ceded rose by 32% to $3.4bn in 2024.
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CFP has a $900mn reinsurance attachment point and is still receiving claims daily.
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AuM remains generally flat at UCITS funds over the weeks since LA fires started.
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FY24 disclosures show shifting fortunes at reinsurer ILS platforms.
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But cat bonds are experiencing negative secondary market price movement.
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The carrier is likely to exceed its Q1 large-loss budget due to the California wildfires.
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The carrier disclosed it will book $1.1bn in net losses from the California fires.
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The group ceded 55% more premium to Nephila over the year at $1.3bn.
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The carrier has been reducing its presence in the state since 2007.
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The carrier has recognised two separate losses for the Palisades and Eaton fires.
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The company says the recent wildfires will be the costliest in its history.
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Programs did not offer adequate risk-adjusted return.
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A negative January return will be unprecedented for ILS industry.
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The company’s reinsurance business also has some exposure, the executive said.
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The carrier has around $2.5bn-$4bn of reinsurance cover specifically for California risk.
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The bond went on watch after Mercury said it would exceed its $150mn retention.
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The Floridian also expects to report its “best earnings quarter” for Q4 2024.
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The figure does not include specie or auto losses.
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Secondary pricing on the carrier’s Topanga Re bond partly recovered following the guidance.
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The company received over 10,100 home and auto claims as of January 27.
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Compared with its initial figure, CatIQ’s latest estimate has increased by 40%.
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Secondary market pricing indicated anticipated California wildfire losses.
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Guy Carpenter said personal lines exposure would account for 85% of the aggregate loss.
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Fitch said 1Q wildfire losses could add 6% to 10% to Mercury’s CoR.
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The total includes fire and smoke damage plus living expenses for evacuees.
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The fire started Wednesday morning and is currently 0% contained.
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The carrier’s Milton loss came in below expectations, but its fire claims will be “material” in Q1.
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Losses from the larger fire will amount to $20bn-$25bn, the modeller said.
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Two 2021 worldwide aggregate ILW notes are also among the markdowns.
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The carrier has received more than 3,600 claims from LA wildfires.
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There are many unknown factors including insurance gaps, high-value property and damage to critical infrastructure.
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The anticipated portion ceded to reinsurance may reach the mid-to-high single-digit billions, it added.
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This will be the most expensive fire in the state’s history, it said.
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A $30bn industry loss would use one-third of Big Four’s 2025 cat budgets.
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ILS managers expect the losses to have some impact on future cat bond spreads.
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Sources say the Fair Plan is under-reserved, leading to the possibility of member assessment.
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The carrier is the largest writer of homeowners’ multi-peril in the state.
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The Palisades fire is estimated at $9bn-$12bn, while Eaton is $6bn-$8bn.
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Investigators are homing in on the likely causes of the incidents.
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The number of structures damaged may put the event on par with the fires of 2017 and 2018.
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The company’s stock price has plummeted in the wake of the LA wildfires.
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Total economic and insured losses are “virtually certain” to reach into the billions.
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AM Best said it expects insured losses from the California wildfires to be “significant”.
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Plenum said impact is marginal because wildfire contributes only marginally to the risk of bonds.
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Moody’s also expects losses in the billions of dollars.
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Six wildfires are now burning in SoCal, with the Palisades fire being the largest.
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Six fires now cover more than 27,000 acres across Southern California.
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Hurricane Milton resulted in the largest insured loss of the year at $25bn.
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The fast-moving blazes have prompted evacuations across the city.
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More than 4,000 acres are burning as thousands evacuate.
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Homeowners’ insurance rates have spiked almost 60% since 2018.
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The regulations are part of a state effort to expand wildfire coverage.
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The bond will provide multi-peril coverage in the US and District of Columbia.
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The bond is split into three tranches of notes.
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Key floods this year outside of the US include the Rio Grande do Sul.
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The broker replaces Goldman Sachs on the business after the bank ceased offering ILS services.
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The effort will draw from California’s research and higher education communities.
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The estimate from the Perils-owned company does not include any losses from Hurricane Debby.
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The rate change will be implemented in November.
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The Insurance Bureau of Canada said the blaze damaged one-third of the Jasper community.
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The regulations have been officially published online, with a hearing to be held next month.
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The ratings agency warns that wildfire is an increasingly risky and unpredictable peril.
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Its Class 13 and 14 notes priced roughly at the midpoint of expectations.
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The partnership seeks to serve corporates with captives, Lloyd’s syndicates and ILS funds.
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The cover will be triggered on an indemnity, annual aggregate basis.
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He will oversee the syndicate’s catastrophe modelling capabilities.
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The RfP covers the CEA and/or the California Wildfire Fund.
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Insured loss estimates are not yet available.
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The insurer confirmed it would be targeting 77% of the original principal amount.
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The carrier has also lifted the effective coupon to 29.9%.
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The sponsor had initially sought $150mn of coverage last month.
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American Family had initially sought $150mn of coverage before scaling the bond to $175mn.
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The sponsor is seeking coverage for named storms, winter storms, wildfire, earthquake and severe thunderstorms in the US.
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The US peak peril cat bond has upsized to $325mn from an initial target of $200mn.
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High Point Re is Selective’s debut cat bond.
