Allstate and top insurers brace for Maui wildfire impact on finances

Property and casualty insurers with exposure to Hawaii are set to incur catastrophe losses that may negatively impact their third quarter earnings, new analysis has found.

Citi analyst Joshua Shanker said fast-moving fires that swept across Maui this month are projected to result in approximately $1.3 billion in homeowners’ losses. The only other event to surpass this total in Hawaii’s recent history is Hurricane Iniki in 1992, which resulted in insured losses of about $3 billion.

“While major hurricanes and earthquakes have historically represented the most devastating insured loss events, the Maui wildfires are another indication that wildfires, tornados and thunderstorms have increased their potential to be multi-billion-dollar events and that the concerns around catastrophe risk have spread from what had typically been a California, Florida and Gulf of Mexico focus,” said Shanker, as quoted by Seeking Alpha.

Considering the significant losses seen in Maui, Shanker went on to note that P&C insurers operating in Hawaii may find themselves resorting to reinsurers to help offset losses surpassing certain thresholds.

He pointed to the insurers that hold substantial stakes in Hawaii’s homeowners’ market and said they would likely bear the brunt of the losses.

With an 8% market share, Allstate is among such insurers. According to Shanker, the insurance giant is projected to see $125 million in catastrophe losses as a result of the wildfires for the third quarter alone.

These estimates are part of a larger projection of $1.0 billion in catastrophe losses for the third quarter due to the ongoing hurricane season, along with an additional $680 million in the fourth quarter.

Aside from Allstate, other key players in Hawaii’s homeowners’ market include AIG and Chubb, which both hold a 2.3% share, as well as The Hartford with a 0.9% share.

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