By George Glover

Shares in publicly-owned insurers that cover California homeowners were tumbling on Friday as the Los Angeles wildfires raged on.

Allstate stock dropped 6.2% ahead of the opening bell, making it the benchmark S&P 500 index's biggest loser. Travelers fell 4%, and Chubb was down 3.6%.

Shares in Mercury General, whose business is concentrated in California, plummeted 30%. Almost 80% of its premiums of $4.6 billion last year came from the state, so relative to its size it's likely more exposed to the fires than any other public property and casualty insurer.

Insured losses from the fires could top $20 billion or "even more if the fires are not controlled," J.P. Morgan analyst Jimmy Bhullar said in a research note Thursday. He added that the losses would be "confined mostly" to homeowners insurers like Allstate, Travelers, and Chubb, but noted that commercial property insurers like American International Group and Kinsale Capital Group could also be exposed. AIG shares were down 3.8% in Friday's premarket, while Kinsale slid 1.3%.

J.P. Morgan also doubled its estimates for the total economic losses to $50 billion. Private forecaster AccuWeather's figure is even higher: it raised its preliminary estimate of the total damage and economic loss to between $135 billion and $150 billion on Thursday, up from $52 billion to $57 billion previously. The revised figure equates to about 4% of the total GDP of California.

The fires have destroyed more than 10,000 structures, including properties owned by the socialite Paris Hilton and When Harry Met Sally actor Billy Crystal. Home builder stocks were rising on Friday, likely on the expectation that the effort to rebuild Los Angeles will boost their revenue. Lennar climbed 3.3%, D.R. Horton was up 1.9%, and Toll Brothers rose 4%.

Southern California Edison has been shutting off power to some customers in the state in an effort to curb the fires. Electricity shut-offs are designed to reduce the risk of the blaze spreading, because objects colliding with energized power lines can create more fires.

Parent company Edison International has been the S&P 500's worst performer this year. The stock fell another 2.2% in Friday's premarket, having tanked 10% on Wednesday. Markets were closed on Thursday for the national day of mourning for former President Jimmy Carter.

Firefighters are still struggling to contain at least five separate blazes raging across L.A. County. Officials said late Thursday that the confirmed death toll had climbed to 10, up from five previously.

Roughly 33,000 acres were aflame, and more than 200,000 were without power across the wider Los Angeles area. About 360,000 people have been ordered to evacuate, according to the Federal Emergency Management Agency.

Write to George Glover at george.glover@dowjones.com

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(END) Dow Jones Newswires

January 10, 2025 07:30 ET (12:30 GMT)

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