U.S. property and casualty insurers slide as Los Angeles wildfire losses mount

(Reuters) – U.S. property and casualty insurance stocks fell in early market trading on Friday as five blazes burned through a third night in Los Angeles, killing at least 10 people and consuming nearly 10,000 buildings.

The Palisades Fire between Santa Monica and Malibu on the city’s western edge and the Eaton Fire near Pasadena on the east side rank as the most destructive in Los Angeles history.

Insurers are expected to expect billions of dollars in accident-related claims from the disaster, which analysts estimate is the most expensive ever in California.

“Given the high value of homes and businesses in the affected areas, we expect insurance losses to run well into the billions of dollars and result in significant losses for P&C insurers with a significant share of the Los Angeles homeowner and commercial property market,” Moody’s Ratings said in a note.

Analysts at Mornginstar DBRS had predicted more than $8 billion in insured losses. JP Morgan expects losses to be as high as $10 billion.

Sector deuters fell 4% before the bell. Mercury General plunged 32%, while Allstate, Chubb and AIG fell between 4% and 6%.

European insurers were also down 3% with Beazley, Lancashire and Hiscox the three biggest losers in UK-listed large- and mid-caps.

The Pacific Palisades area is one of the most expensive neighborhoods in the US, home to Hollywood A-listers and multi-million dollar mansions. Before this week’s crash, insurance costs were among the most affordable in the country, according to a Reuters analysis.

But that could change after the scale of losses expected in the raging Los Angeles wildfires and regulatory changes late last year, four analysts told Reuters earlier this week.

(Reporting by Manya Sani in Bengaluru; Additional reporting by Sruthi Shankar; Editing by Krishna Chandra Elluri)