Specialty companies specifically operating in the utility sector are likely to face substantial claims and losses stemming from the bankruptcy filing by PG&E Corp., the California utility whose equipment is being investigated as having a potential role in the recent deadly wildfires, according to a new AM Best briefing.
The briefing, titled, “Specialty Insurer’ Exposures to PG&E Bankruptcy Are Within Risk Appetites,” states that claims experience likely will encompass direct wildfire damage, as well as directors and officers liability related to the bankruptcy filing.
However, specialty insurers that insure PG&E have a limited risk appetite and have sub-limits in place that will help limit the risk of volatility arising from these exposures. In addition, because these companies are well-capitalized, they should be able to absorb the losses. Since the anticipated losses will be within their risk appetites, AM Best does not expect any impact to these insurers’ Credit Ratings.
AM Best says the following companies have direct and indirect exposures to PG&E (the amounts associated with the exposures are not available):
- Associated Electric and Gas Insurance Svcs
- Energy Insurance Mutual
- Oil Casualty Insurance Ltd.
- Nuclear Electric Insurance Ltd.
Several of the massive, deadly wildfires of 2017-2018 believed to have been caused by PG&E’s equipment have left it with potential liabilities of approximately $30 billion or more.
The company has said that a court-supervised process under Chapter 11 will best enable it to resolve its potential liabilities in an expeditious fashion, but AM Best expects that the losses and the legal process will be drawn out over a lengthy period.
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