Residents have begun returning to their Laguna Beach, Calif.homes, but those whose homes were destroyed or damaged by alandslide Wednesday will have to face rebuilding without collectingon their homeowners insurance.

The landslide struck the Bluebird Canyon area of Laguna Beach,destroying or badly damaging 18 homes. Almost all of those homes,according to Lehman Bros. analyst Jay Gelb, were valued at $1.5million or more, but will not be paid for by insurers.

"These losses are devastating for the individuals involved butshould result in immaterial insured damage because landslides areexcluded from most homeowner's policies," Mr. Gelb said in a noteto investors, classifying the landslides as a "neutral" event forinsurers.

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