Munich Re faces $1.26 billion in claims from Los Angeles wildfires

Germany’s Munich Re said Wednesday it expects about €1.2 billion ($1.26 billion) in claims resulting from the Los Angeles wildfires, representing the biggest loss reported so far by a single European reinsurer for the January catastrophe.

The wildfires killed more than two dozen people and destroyed or damaged more than 16,000 structures, charring an area bigger than Paris.

“They were clearly the most substantial wildfire losses in the history of the insurance industry,” Munich Re said.

Munich Re, the world’s largest reinsurer, said that its estimate has a high degree of uncertainty because the losses were complex.

Analysts have estimated insurance claims across the industry could total $45 billion. Hannover Re, another German reinsurer, has said that it could face claims amounting to €700 million.

Credit ratings company Fitch has said that European insurers had reduced exposure to California after a spate of fires in 2017 and 2018 but would still be “materially affected” by this year’s fires because of their scale.

Munich Re provided the estimate as part of its fourth-quarter earnings report, which showed a 2.5% fall in net profit, slightly worse than analysts had expected.

Fourth-quarter net profit was €979 million, down from €1 billion a year earlier and short of a €1.02 billion analyst consensus provided by the company.