Frankfurt (Germany) (AFP) – German reinsurance giant Munich Re said Wednesday that last month’s huge wildfires in Los Angeles had been the costliest “in the history of the insurance industry”. Munich Re, which acts as an insurer for insurers, said it expected some 1.2 billion euros ($1.3 billion) in loss claims from the fires. The estimate was “subject to a high degree of uncertainty owing to the complexity of the losses incurred,” the group said in a statement. Nonetheless, the figure would represent “the most substantial wildfire losses in the history of the insurance industry,” Munich Re said.
The conflagration around the United States’ second city burned for three weeks, forcing thousands of residents to evacuate their homes. The fires destroyed thousands of structures, affecting the affluent Pacific Palisades neighbourhood of Los Angeles, Malibu, and the community of Altadena in the wider county. Private meteorological firm AccuWeather has estimated the total damage and economic loss at between $250 billion and $275 billion.
The impact of the wildfires would show up in Munich Re’s results for the first quarter of 2025, but the group said it was well prepared to absorb the costs from such natural catastrophes. Munich Re had “reduced the risk (to the group) compared to maybe five years ago,” chief financial officer Christoph Jurecka told reporters. From an insurance perspective, the wildfires in Los Angeles were “no problem at all,” CEO Joachim Wenning said. “Risks that lead to major damage are part of our business,” Wenning stated, adding that Munich Re would continue to cover wildfires as long as the compensation was appropriate.
For 2024, the reinsurance group said it had booked a net profit of 5.7 billion euros, in line with the estimates of analysts surveyed by the financial data firm FactSet. In the fourth quarter of 2024, Munich Re’s net profit came in at 979 million euros, a three-percent decline on the same period in the previous year. Total claims from major disasters cost the group 3.9 billion euros, 2.6 billion euros of which were related to natural catastrophes. The most significant of these was Hurricane Helene, which swept through the southeastern United States in late September, racking up 0.5 billion euros in costs for Munich Re. Hurricane Milton, which made landfall in Florida later last year, generated losses of 400 million euros for Munich Re in the fourth quarter.
Despite the huge damages caused by the Los Angeles wildfires, Munich Re said it still expected to see net profit rise to six billion euros in 2025. Revenues were expected to total 64 billion euros in the year ahead, the group said.
© 2024 AFP
