Business
State Farm says it will pay $7.6 billion for L.A. fires but reinsurance will slash losses
State Farm General, California’s largest home insurer, estimated Tuesday that it will cost $7.6 billion to settle its Los Angeles-area fire claims, but it said reinsurance will lower its losses to about $612 million.
The company disclosed it has already paid $1.75 billion to cover about 9,500 claims and will be able to handle all of its fire-related expenses because the majority of losses will be absorbed by its parent company, State Farm Mutual Automobile Insurance Co., which also provides it with reinsurance.
That reinsurance will lower the losses State Farm General must absorb to $212 million. But the company also expects to be assessed about $400 million to help bail out the California Fair Plan, an insurer of last resort backed by licensed state carriers, which is facing some $4 billion in fire-related losses.
Although State Farm General’s direct losses are far larger than other California insurers have announced, reflecting its leading market share, its net losses are in line with — if not smaller than — what some other insurers have disclosed.
Los Angeles-based Farmers Insurance, the state’s No. 2 home insurer, said last week that it expects to lose at least $600 million from the Los Angeles-area fires, though that figure does not include any FAIR Plan assessment.
Mercury Insurance, also based in Los Angeles, said its gross losses could total as much as $2 billion but could net under $200 million after reinsurance and possible recoveries from Southern California Edison, if the utility is found liable for having sparked the Eaton fire.
Even so, S&P Global on Tuesday afternoon announced that it had put State Farm General’s AA financial rating on a negative watch, citing its “weak underwriting performance over the past five years” and “potential earnings pressure in 2025, largely from the recent California wildfires.”
State Farm General released its loss figures one day before a meeting with state Insurance Commissioner Ricardo Lara, after its request for an emergency hike of 22% in its home insurance rates.
State Farm General said S&P’s ratings watch “reinforces the need for urgency” in getting its emergency rate increase.
The company has said it needs the premium revenue as it awaits a decision on a proposed rate hike it filed in June, when the company asked for a 30% rate increase for its homeowner policies as well as 36% for condo owners and 52% for renters.
State Farm General said it is prepared to issue refunds for customers who pay the interim emergency rates if the department approves lower increases than the rate hikes it sought last year.
Lara turned down the emergency request this month pending more financial and other information from the carrier, which has retreated from the state’s home insurance market amid rising wildfire and other claims.
In March 2024, the company announced that it would not renew 72,000 home, apartment and other property policies in California, citing wildfire risks and other concerns. That followed its decision in May 2023 to stop writing new business, homeowners, and other personal property and casualty insurance in the state. State Farm continues to sell personal auto policies.
In announcing its losses Tuesday, State Farm General said its request was not based on its Los Angeles-area wildfire losses, though it noted the fires would reduce the company’s surplus by an additional $400 million. An insurer’s surplus is a financial cushion that helps pay for catastrophes and other unexpected claims.
The company urged Lara to approve its request for an emergency rate increase.
“Immediate interim approval is an indispensable and critical first step to eventually restoring the company’s financial strength. Financial strength is necessary so an insurance company can pay for any future claims for the risks it insures,” the company said in a statement.
State Farm General also released a letter it sent to Lara answering questions he posed to the insurer after initially turning down its request for the emergency rate request, which also asked for an increase of 38% for rental dwellings as well as 15% for renters and condo owners.
Even if those requests are granted, that would not be sufficient for it to begin offering policies to new customers seeking property insurance, it said in the letter.
After last month’s wildfires, at the request of Lara, State Farm offered one-year renewals to all Los Angeles County residents whose property policies had not expired prior to the fires’ start Jan. 7.
Under state law, homeowners who suffered a total loss in the fires must be offered renewals for two years.
The insurer estimated that its offer would apply to roughly 70%, or 1,100, of the 1,626 residential policies it had in Pacific Palisades’ primary ZIP Code when it announced it would not offer renewals last year.
The luxury shopping center in Pacific Palisades will reopen next month after more than $100 million in renovations forced by the January 2025 wildfire that devastated the Los Angeles neighborhood.
Palisades Village will reopen Aug. 15, owner Rick Caruso announced Wednesday. The outdoor center survived the blaze that destroyed homes and other businesses but needed refurbishment to eliminate contaminants that the fire could have spread.
Crews are putting finishing touches on mall buildings after tearing them down to the studs, treating the wood and rebuilding the walls, Caruso said.
“Everybody’s working, and stores are moving their products in,” he said. “It’s a really cool feeling that people have really locked arms and are working together.”
An electrician installs lighting for a restaurant at Rick Caruso’s Palisades Village on Thursday. The shopping center is scheduled to reopen mid-August.
(Myung J. Chun / Los Angeles Times)
Pacific Palisades resident Allison Polhill, who is rebuilding the home of 30 years that her family lost in the blaze, said she is “thrilled” at the prospect of returning to the mall she used to frequent. Its comeback is a boost for the community, she said.
“Every single step that we make to reopen our commercial corridors is going to bring more people back into the Palisades,” said Polhill, who expects to move back into her home at the end of August.
A total of 6,822 structures were destroyed in the Palisades fire, including more than 5,500 residences and 100 commercial businesses, according to the California Department of Forestry and Fire Protection.
Caruso previously attributed the mall’s survival to the hard work of private firefighters and the fire-resistant materials used in the mall’s construction.
The $200-million shopping and dining center opened in 2018 with a movie theater and a roster of upmarket tenants, including Erewhon, which may be the only grocer in the heart of the fire-ravaged neighborhood when it opens.
Caruso’s company was able to fill the mall with tenants despite the long shutdown.
Palisades Village is 99% leased, with the majority of tenants returning, said Jackie Levy, chief financial and revenue officer. Nearly one-third of the shops and restaurants are new to the property.
A firefighter carries a hose back to his rig while walking through a destroyed home from the Palisades fire in Pacific Palisades on Jan. 7, 2025.
(Genaro Molina / Los Angeles Times)
Last year, Pacific Palisades-based fashion designer Elyse Walker said she would reopen her eponymous store in Palisades Village after losing her 25-year flagship location on Antioch Street to the inferno.
Other neighborhood shops destroyed in the fire that are reopening at the mall include K Bakery and Loomey’s Toys, which caters to children up to age 12 and used to be across the street from Palisades Elementary Charter School.
“It’s been a journey and I’m excited because I wasn’t sure that there was going to be a place to come back to,” said toy store owner Amanda Rastegar. “Hopefully we can bring some of that magic back.”
Rastegar’s home in the Palisades survived but was damaged by the fire. The family returned about eight weeks ago. Her last memory of the fire was a burning supermarket.
“I just couldn’t wrap my brain around what was happening,” she said. “By the time I left, Gelson’s was on fire.”
Among the returning tenants is Angelini Ristorante & Bar. Well-known Los Angeles chef Gino Angelini said he will be in the kitchen next month for a return of the Italian restaurant.
“We won’t do a big celebrity open,” he said. “We want to have a very soft opening and see our customers come back.”
Construction takes place at Rick Caruso’s Palisades Village on Thursday. The shopping center is scheduled to reopen mid-August.
(Myung J. Chun / Los Angeles Times)
An elaborate celebration would not feel “correct for me,” Angelini said, because the devastation has been “very sad” for so many.
Other new tenants include local chef Nancy Silverton, who has agreed to move in with a new Italian steakhouse called Spacca Tutto. Women’s activewear retailer LESET will open its first West Coast location.
Caruso said he is optimistic that customers will return to the center, even though many Pacific Palisades residents are still dispersed. One tracking system estimated that about 30% of the Village’s customer base was impacted by the fire, he said.
“That means 70% did not get impacted, so there’s a lot of customers still left out there,” Caruso said. Historically, the center drew customers from as far away as Beverly Hills and Calabasas, as well as Malibu, Brentwood and Santa Monica.
He also hopes many will be inspired to visit the revived mall.
“I believe in the goodness of people and I believe that people are going to want to support the Palisades,” he said. “They’re going to want to be there and support the businesses that have had the courage and the heart to reopen.”
Walmart is rapidly expanding its network of electric vehicle chargers designed for customers to use while they shop.
The network could help fill gaps in EV infrastructure in states with greater need for chargers. Walmart, which has more than 5,000 locations in the U.S. and hundreds in California, says more than 90% of Americans live within 10 miles of one of its stores.
The chargers also offer an incentive for customers to choose Walmart — Walmart Plus members will receive a 10% discount off an average price of $0.46 per kilowatt-hour of energy at the company’s chargers.
Walmart chargers are already available at more than 75 locations in 17 states, with Texas boasting the most charging stations, followed by Florida and Arizona.
Matthew Nelson, Walmart’s director of energy policy, said last week on LinkedIn that the network will soon reach 29 states, including California.
“We are delivering on the promise of affordable, reliable and convenient charging,” Nelson said in his post.
According to Walmart’s website, six charging stations are coming to California soon, though the company did not offer a specific timeline.
The chargers will be installed at stores in Antelope, Brea, Fresno, Stockton, Suisun City and Vallejo.
Most charging sites in California will include eight to 16 fast-charging stalls, said Walmart spokesperson Kelsey Bohl.
The company first announced plans in April 2023 to install its own EV chargers at Walmart and Sam’s Club stores, with a goal of installing thousands of chargers by 2030. Partnering with ABB E-Mobility and Alpitronic, it added 25 new charging sites this past May and six more in June.
“Walmart is building a leading retail-integrated EV fast-charging network, focused on delivering an affordable, reliable and convenient charging experience where customers already shop,” Bohl said in an emailed statement. “Customers can charge while they shop, access stations through the Walmart app they already use, and benefit from affordable pricing.”
The charging stations already available include 612 individual charging stalls using 400-kilowatt chargers. Each stall has a dual charging cord with both Combined Charging System and North American Charging Standard connectors. The standard connectors, designed by Tesla, are smaller and lighter than the combined systems.
The primary way to pay for the chargers is through the Walmart app, but the company is also experimenting with built-in credit card readers to allow those without the app to use the stations.
Customers can check charger availability on the Walmart app. The company said the chargers will be available 24 hours a day.
Robotaxis could be turning into robocops.
A self-driving Waymo reported two teens to San Mateo, Calif., police on Monday after they were found drinking alcohol and shooting toy guns in the back of the vehicle.
According to a social media post from the San Mateo Police Department, officers detained two 15-year-olds after the Waymo they were riding in contacted the department and stopped in a parking lot until law enforcement arrived.
“Parents do you know where your teens are?” the San Mateo Police Department wrote on Facebook following the incident. “Waymo does!”
Officers removed both teens from the vehicle and determined they were using toy guns to shoot Orbeez out the windows. Orbeez are small, water-absorbing beads sold at toy stores.
“Toy guns, water guns, and BB guns all pose real dangers, especially to an untrained eye,” the Police Department said. “The simple handling of them can cause fear in [passersby].” “
A video posted on Facebook shows at least five officers and a police dog responding to the scene and approaching the Waymo with their weapons raised.
Waymo did not immediately respond to a request for comment.
Waymo vehicles have internal cameras and microphones that may be used in an emergency or to “promote safety and security,” according to Waymo’s online support page.
The cameras are also used to ensure the vehicles are clean and to help find lost items, according to the support page.
The company said it does not use facial recognition or other biometric identification technologies to identify individuals.
“In more urgent circumstances, support may access live video during a trip,” the Waymo page said.
The San Mateo Police Department’s Facebook post has garnered nearly 60 comments, with one user accusing Waymo of “snitching.”
“At least they got a designated driver?!” one user commented.
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