Zurich estimates the impact on its business of record wildfires in California will be $US200 million ($313.82 million). 

Total insured losses from the catastrophe have been estimated at $US45 billion ($70.6 billion).

CEO Mario Greco says the disaster “further evidences the value of the protections we provide”.  

The fire losses, which include Zurich subsidiary Farmers Re, are “set against the backdrop of strong capitalisation and profitability, well positioned for future growth”, he says.

CFO Claudia Cordioli says $US48 million ($75.46 million) of Zurich’s losses stem from a quota share with Farmers Exchanges, and the remainder is a “still very preliminary estimate”.  

“Most of it is actually coming through commercial activities and builders, which is the majority of our book in that area,” she said. “We don’t do private or high net worth in the US, so this is where the exposure comes from. Time will tell.”

Farmers Exchanges expects a pre-tax net loss of about $US600 million ($941.4 million) due to the wildfires and a $US250 million ($392.3 million) cost to restore its reinsurance program.  

Ms Cordioli says Farmers is “very well equipped, even post such an event in terms of surplus, for them to grow in California and in other states as well”.

She says most reinsurers have been modelling wildfires as secondary perils, but the LA disaster “is getting the proportions of a hurricane or a major peril”.

“It will be interesting to see if and how they consider that in the modelling going forward. We don’t expect to make major changes to our reinsurance structure.”

Farmers, California’s second-largest home insurer, expects to lose at least $US600 million ($941.4 million) from the fires – including payments from its reinsurance program but not an expected assessment from the FAIR Plan, the state’s home insurer of last resort.

S&P Capital IQ has estimated leading insurer State Farm’s losses at $US6.5 billion ($10.19 billion) before reinsurance payments, while Allstate estimates $US1.1 billion ($1.73 billion), Chubb $US1.5 billion ($2.35 billion) and Travellers $US1.7 billion ($2.67 billion) including its estimated FAIR Plan assessment.

Mercury Insurance says its gross loss could reach $US2 billion ($3.14 billion) before reinsurance and other possible fiscal recoveries.