By Edward Carron

March 26 - (The Insurer) - State Farm General, Mercury General, Heritage and reinsurer Conduit Re reported wildfire losses that represent proportionally the largest balance sheet hits across a range of carriers for which disclosures have been made.

State Farm General, State Farm's California subsidiary, has reported that it expects to retain $212 million of its $7.6 billion of gross losses, and that its California FAIR Plan contribution will be $400mn.

The insurer estimates that after reinsurance recoveries, taxes, and partial recoupment of FAIR Plan payments, the impact on its capital and surplus will be $400mn, almost 40% of its $1.04 billion total at the end of 2024.

Los Angeles-based insurer Mercury General’s estimated $155 million to $325 million of losses. The wildfires hit equates to between 8% and 16.7% of its 2024 shareholder equity.

Heritage, Conduit Re and Lancashire also disclosed loss estimates that, at the high end, would represent over 10% of their net worth.

On the other end of the spectrum, the exposure of Great-West Lifeco, Zurich, Berkshire Hathaway, and Axa to the fires is estimated at less than 1% of shareholder equity.

These findings were from analysis conducted by The Insurer in which loss estimates disclosed by listed carriers were divided by total shareholder equity (or where unavailable, capital and surplus) as of December 31, 2024.

The carriers with the largest proportional impacts have tended to be smaller insurers with greater concentrations of risk in California.

The worst affected, Mercury General and State Farm General (standing alone rather than as a subsidiary of its parent), meet both criteria.

Among pure-play reinsurers or those with significant reinsurance operations, Conduit Re fared the worst measured by percentage of shareholder equity, well above major cat markets such as RenaissanceRe and the continental European giants.

It was revealed on January 7, a few days after the fires started, that Mercury General expected a full-retention loss of $150 million on its $1.29 billion cat cover, prompting a fall in its share price of 27% in five days.

The company subsequently reported that its estimate for gross catastrophe losses from the fires before its share of FAIR Plan losses is in the range of $1.6bn to $2.0bn, while its net catastrophe losses before taxes stand at $155mn to $325mn.

CFO Ted Stalick said on an investor call that the carrier anticipated recovering up to 70% of its losses from utility companies through subrogation, making it less likely to have to claim the fires as two separate events on its reinsurance tower.

Stalick said that they will be “aggressively” pursuing subrogation from the utility companies for their potential role in sparking the wildfires.

In the day following this news the share price saw a 9.3% jump; however, the recovery was short lived and the price dropped back down in the following days. It currently sits at $55.9, 14% lower than before January 7.

On the day that the losses were revealed Conduit Re’s share price dropped 7%, despite otherwise positive results.

The Bermuda-based reinsurer disclosed a net loss estimate for the California wildfires of $100 million to $140 million during a media call alongside its 2024 results.

The disclosed figures were higher than expected after analysts at Berenberg released their own estimate in the week prior of $50 million to $90 million of losses.

The London-listed specialist reinsurer launched via an IPO in 2020 and has grown its GWP and revenue year on year and posted a combined ratio below 100% in 2023 and 2024.