'Our hearts go out'

Property-and-casualty insurer Travelers is expecting a significant financial impact from the devastating wildfires this month in Los Angeles County, while executives indicated Wednesday that the company born in Hartford plans to continue providing homeowners' coverage in California.

Several of the company's top executives gave an initial assessment of the Eaton and Palisades fires during an earnings call on Wednesday with investment analysts. They declined to provide any estimates related to policyholders' claims, but their evaluation shed light on how the company is responding to the fires, which have led to the deaths of at least 28 people and destroyed more than 14,000 structures since they broke out on Jan. 7.

"The California wildfires that began earlier this month are going to be a material event for the industry and will have a material impact on our first-quarter earnings," Dan Frey, Travelers' chief financial officer, said during the call. "Because the event is so recent, and to some degree still ongoing, we'd like to take more time to refine our analysis before providing an estimate."

Officials from Travelers, which has an office headquarters in New York City as well as many other sites around the country including its iconic building in downtown Hartford, declined to immediately quantify the company's exposure to the wildfires.

Other companies' estimates indicate that the latest California fires will end up being one of the costliest natural disasters in recent years in the U.S. Initial property losses from the Eaton and Palisades fires are estimated to be between $35 billion and $45 billion, property data and analytics provider CoreLogic said in a Jan. 16 analysis.

"We've assessed impacted areas through aerial imagery and made live contact with a substantial majority of our customers with claims, enabling us to expedite claim payments," said CEO and Chairman Alan Schnitzer. "In addition, our expert claim team is on the ground. We're grateful for their efforts. We also have mobile claim offices positioned in the area where customers can file a claim in person or receive an advance claim payment."

Travelers writes two types of property policies in California. A standard policy includes coverage for wildfires. The other policy does not include fire coverage, but it can be paired with FAIR Plan coverage, which is available to California residents and businesses that cannot obtain certain policies from regular insurers.

"Our appetite for and exposure to $5 million homes in California is very limited," Michael Klein, Travelers' president of personal insurance said in response to a question from an investment analyst. "Our appetite really is middle market ... When you get to $5 million homes, we would consider that really more high-net-worth business, and we're not a significant player in that market."

Travelers' response to the wildfires also includes a $1 million commitment to support several nonprofits involved in recovery and relief efforts.

"Our hearts go out to everyone affected -- those who have lost their homes, their businesses and, most tragically, their loved ones," Schnitzer said. "As a company rooted in the companies we serve, we will be there for our customers and neighbors to support them as they recover and rebuild."

California comprises one of Travelers' largest markets. In 2023, about 7% of Travelers' direct written premiums in its personal insurance business, which includes automobile and homeowners' policies, were written in the state, according to the company's 2023 annual report. Texas and New York, which had respective shares of about 12% and 9%, were the only states that ranked higher in that category.

"We look forward to working with policymakers in California to make sure the state has a resilient insurance market going forward," Schnitzer said.

The earnings call Wednesday was originally scheduled to discuss Travelers' financial results during the fourth quarter and entirety of 2024. The company recorded a profit of about $2 billion for the fourth quarter and a bottom line of about $5 billion for all of 2024, marking year-over-year increases in both timeframes.

"Our strong results and financial position enable us to be there when our customers need us most, as our friends and neighbors in Los Angeles do right now," Schnitzer said.

Travelers is one of three Connecticut-based property-and-casualty insurers that are members of the S&P 500 index and ranked in last year's edition of the Fortune 500 list of the largest corporations in the U.S. The other two, Greenwich-based W.R. Berkley and The Hartford, will, respectively, hold their next quarterly earnings calls on Jan. 27 and Jan. 31.