State Farm shares cost estimates of wildfires

State Farm’s current estimate of direct losses from the Los Angeles fires stands at approximately $7.6 billion, taking into account both reported and not reported claims. The company’s previous estimated loss was $6.85 billion.

State Farm General has paid out $1.75 billion on approximately 9,500 claims.

Estimates for SFG’s retained losses after reinsurance, and for SFG’s share of total FAIR Plan losses, are approximately $212 million and $400 million, respectively. Based on these estimates, and after accounting for reinsurance recoveries, tax impacts and partial recoupment of SFG’s allocation of the FAIR Plan’s recent $1 billion assessment, the January fires will reduce SFG’s surplus, which stood at $1.04 billion at the end of 2024 after a decline of over $300 million from year-end 2023, by approximately $400 million.

State Farm Mutual Automobile Insurance Company serves as the primary reinsurer for SFG and will assume the majority of losses related to the fires.

S&P Global Ratings placed its AA financial strength and issuer credit ratings on State Farm General Insurance Co. on CreditWatch with negative implications.

“We remain deeply concerned about the financial position of State Farm General, as it is difficult to match price to risk in California. As we said in our emergency interim rate filing on Feb 3, we need immediate rate increases to help stabilize State Farm General’s financial condition and avoid a potential rating agency downgrade. S&P’s “CreditWatch – Negative” today reinforces the need for urgency.” – State Farm.