According to a recent estimate by Goldman Sachs, losses to insurance companies resulting from the Los Angeles wildfires could be as high as $30 billion. Consequently, many insurance stocks, particularly property and casualty insurance companies, have been trading down or sideways since the fires started. Utility companies in the area are also struggling to figure out the extent of the damages as well as their future prospects in the region.
Even today, a large portion of the fire remains uncontrolled, left at the mercy of the strong LA winds to determine the direction in which it will spread. Insurance companies will not only have to settle claims quickly but are also uncertain how much more the fires will spread. We looked at the companies that are negatively impacted by these events and whose stock is feeling the heat from the fires.
To come up with the 5 stocks that are negatively impacted by the LA wildfires, we only considered companies with a market cap of at least $10 billion.
5. The Travelers Companies, Inc. (NYSE:TRV)
The Travelers Companies Inc. not only deals with personal and commercial properties but also offers casualty insurance services in the US and internationally. In the insurance segment, it operates in personal insurance, business insurance, and bond and specialty insurance. The stock’s price has consistently rewarded investors along with a reliable dividend history. Even though the company’s evaluation is attractive, the ongoing crisis of the Los Angeles wildfire is a cause of concern for investors.
If Travelers incurs a loss worth $30 billion, it would lose about 3.8% of its total value. It is just an estimate but losses can cross this estimate if the fire keeps spreading. Shares in Los Angeles-based Travelers have recovered most of their losses in the last 5 days, though the stock is still down over 4% in the last month. Property and casualty stocks keep declining as they are in the spotlight due to LA’s wildfire.
According to J.P. Morgan, insurance losses from the ongoing wildfires are estimated to be at least $20 billion. It suggests that TRV is among the companies that are most exposed to the losses caused by ongoing wildfires. The company’s financial health and strong performance are good indicators but the situation right now is not in its favor. It might be a risky option at the moment but it is still a valuable option for the long term.
4. Chubb Limited (NYSE:CB)
Chubb Limited provides insurance and reinsurance products globally. It’s a top publicly traded commercial property insurer with a strong performance in the past year. Due to the ongoing crisis of wildfires in Los Angeles, the stock went through a decline. Share prices have improved in the last 4 days and are recovering losses.
The company’s expected EPS growth for 2025 & 2026 is 7.37% and 6.77% respectively. Keeping in mind the current crisis and its effects on the company, estimates might vary. Wells Fargo projected that the Los Angeles wildfire could cause damage worth $30 billion to the insurance sector.
According to a team directed by analyst Elyse Greenspan, 12,000 structures each valued at around $3 million have been demolished. Being an insurance and reinsurance provider, CB will bear losses resulting from the ongoing crisis. Despite all the negativity, the stock has performed well in the last two days, soothing investor nerves.
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