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Pacific Gas & Electric Co.’s bankruptcy will likely cause substantial losses and claims to specialty insurers operating in the utility sector, ratings agency A.M. Best said Friday in a report.
Losses from direct wildfire damage and directors and officers liability related to San Francisco-based PG&E’s bankruptcy will be felt by a number of specialty insurers, Best reported.
However, “specialty insurers with exposure to PG&E have a limited risk appetite and have sublimits in place that will help limit the risk of volatility arising from these exposures,” Best said.
“Because these companies are well capitalized, they may be able to absorb multiple losses,” Best said in the report, adding it does not expect any impact to these insurers’ credit ratings.
No fewer than 121 liability and property insurance policies, including 23 excess liability insurance and reinsurance policies that were in place at the time of the November 2018 California wildfires, are listed in a standard court motion to maintain insurance filed by PG&E as part of the bankruptcy protection Tuesday.
D&O liability insurers for PG&E, per the court motion, include ACE American Insurance Co.; Allianz Global Risks; Argonaut Insurance Co.; industry mutual insurers Associated Electric & Gas Insurance Services Ltd. based in East Rutherford, New Jersey, and Tampa, Florida-based Energy Insurance Mutual Ltd., both of which PG&E is a member; Berkeley Insurance Co.; Endurance Risk Solutions Assurance Co.; Houston Casualty Co.; North American Specialty Insurance Co.; Starr Indemnity & Liability Co.; Twin City Fire Insurance Co., as well as Lloyd’s syndicates Barbican, Hiscox (Alpha) and Munich Re at Lloyd’s.
As reported earlier, in addition to its $1.4 billion property and liability insurance program for 2018-19, PG&E secured a $200 million catastrophe bond and has a captive via Energy Insurance Services Inc., a unit of Energy Insurance Mutual Ltd., court documents show.
PG&E faces lawsuits from property owners and some insurers alleging that poor upkeep of its transmission lines caused the fires.
Insurers have brought $17 billion of claims against the utility related to property losses from the wildfires, according to PG&E filings. PG&E estimates its liabilities to insurers and wildfire victims could exceed $30 billion, not including punitive damages.
Pacific Gas & Electric Co.’s plan to file for bankruptcy protection due to financial woes arising from the California wildfires could hit some insurers investment portfolios as well as generate liability claims, rating agency Moody’s Corp. said in a report on Friday.