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Global Reinsurers Resilient Amid LA Wildfires: S&P

by Celia

Despite significant wildfires ravaging Los Angeles County, global reinsurers are expected to remain stable, with the financial impact for these companies deemed manageable, according to S&P Global.

Insured losses from the wildfires are projected to be substantial, though they are expected to remain within the natural catastrophe budgets for the first quarter of 2025. Strong capitalization and disciplined underwriting strategies, including higher attachment points for property catastrophe coverage, position reinsurers to absorb the losses without substantial effects on their earnings.

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Primary insurers, while facing considerable damage, are also predicted to withstand the financial strain. This stability is supported by their strong financial performance in 2024 and the reduced policy coverage in California’s wildfire-prone areas.

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The wildfires signal an early start to the 2025 natural catastrophe season, following a challenging 2024 when global insured losses from natural disasters reached $140 billion, marking it as the third costliest year on record.

While property catastrophe reinsurance pricing has slightly moderated from its peak, reinsurers are maintaining a focus on strong terms and conditions to navigate the ongoing challenges.

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