State Farm General has estimated direct losses from the Los Angeles wildfires at $7.6 billion, with retained losses after reinsurance at $212 million and its share of FAIR Plan losses at $400 million.
According to its latest update, State Farm General has paid out $1.75 billion on approximately 9,500 claims filed due to the wildfires.
As mentioned, the current estimate of direct losses from the fires stands at $7.6 billion, accounting for both reported and not reported claims. State Farm General’s retained losses after reinsurance, and its share of total FAIR Plan losses, are approximately $212 million and $400 million, respectively.
“Based on these estimates, and after accounting for reinsurance recoveries, tax impacts and partial recoupment of State Farm General’s allocation of the FAIR Plan’s recent $1 billion assessment, the January fires will reduce State Farm General’s surplus, which stood at $1.04 billion at the end of 2024 after a decline of over $300 million from year-end 2023, by approximately $400 million,” State farm explained.
The insurer has expressed concerns following S&P’s decision to place its ratings on CreditWatch with negative implications, stating, “We remain deeply worried about State Farm General’s financial position, as pricing risks accurately in California remains challenging.
“As outlined in our emergency interim rate filing on February 3, immediate rate increases are essential to stabilizing State Farm General’s finances and preventing a potential rating downgrade. S&P’s ‘CreditWatch – Negative’ designation today underscores the urgency of this need.”
As Reinsurance News understands, State Farm’s losses could have been considerably higher had it not chosen to non-renew about 30,000 California property insurance policies in March 2024 and exited the commercial apartment sector, affecting another 42,000 policies.
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