Lloyd's of London expects $2.3 billion in net losses from Los Angeles wildfires

LONDON (Reuters) - Lloyd's of London said on Monday it expected $2.3 billion in net losses caused by the recent Los Angeles wildfires, as the insurance marketplace reported a dip in underwriting profit for last year.

The estimated loss from the wildfires in January, which killed more than two dozen people and destroyed or damaged more than 16,000 structures, follows an announcement by Germany's Munich Re that it faced about 1.2 billion euros ($1.3 billion) in claims from the fires.

Hannover Re, another German reinsurer, forecast claims of 700 million euros while French insurer AXA estimated a pre-tax impact of about 100 million euros.

"We would like to extend our deepest sympathies to those affected by the California fires earlier this year. Although we are still assessing the full impact, we do not expect this to be a capital event," Burkhard Keese, Lloyd's chief financial officer, said in a statement.

Lloyd's said the estimated losses were not included in its results for 2024, which it released on Monday in a set of preliminary numbers before its final full-year results are published on March 20.

Keese described 2024 as an "excellent underwriting year" for Lloyd's as gross written premiums rose 6.5% on a year-on-year basis to 55.5 billion pounds, thanks primarily to growth in its property and reinsurance divisions.

However, underwriting profit dropped to 5.3 billion pounds, 10% lower than the 5.9 billion pounds it reported for 2023.

Lloyd's said its combined ratio rose to 86.9%, up from 84% in the previous year. The combined ratio is an industry measure, with a reading below 100% meaning earnings from premiums are higher than the amount paid out in claims. 

Lloyd's is a commercial insurance and reinsurance market, with more than 50 member companies.

($1 = 0.9234 euros)

(Reporting by Tommy Reggiori Wilkes; Editing by Paul Simao)