Insurance claims from recent California wildfires will cost Seattle-based Safeco an estimated $35 million in pretax losses, the company said.
The insurer said the figure represents the estimated losses both from claims received through Tuesday and future expected claims. The estimated effect on fourth-quarter net income is $23 million after tax, or 24 cents per diluted share.
State Farm, without providing a dollar figure, said recently that it logged more than 5,407 claims, and 470 involve a total loss. The insurer said it had 700 additional auto claims.
The Insurance Information Network of California said the industry as a whole has logged more than 14,000 claims and projections for total industry losses are about $1.5 billion.
The Safeco pretax estimated losses include $30 million in personal lines property and $5 million in commercial property.
"Safeco has been on the ground with our customers since day one of the fires," said Paula Rosput Reynolds, Safeco president and chief executive officer. "We appreciate the support of the Department of Insurance and local law enforcement in allowing us to respond quickly to our customers."
Safeco said its National Catastrophe Team arrived on the scene shortly after the fires were reported, helping to answer questions from displaced homeowners as well as contacting Safeco customers with information on how to file their claims.
Once the wildfires were contained, Safeco adjusters entered damaged regions. The company also announced a package of donations to local chapters of the Red Cross totaling up to $250,000.
Safeco said estimated losses are based on the value of property in areas with fire damage, its knowledge of the severity and reporting patterns from similar catastrophes in the past, damage projections based on home values, anticipated costs for a surge in demand for goods and labor to complete repairs, and other factors requiring considerable judgment.
Given the uncertainties affecting the estimation of losses, the company said it may refine its estimates and assumptions in the future.
Safeco will announce fourth-quarter financial results on Jan. 31, 2008.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.