Los Angeles Fires

The year 2025 started with a catastrophic fire event that affected not only the insurance industry but will have an impact on the ILS asset class as well. The Palisades and Eaton fires in the Los Angeles area both erupted on Jan. 7, fuelled by severe drought conditions and strong Santa Ana winds. Fire fighting efforts lasted until February before the blazes were fully contained.

Impacts on Cat Bonds with per occurrence coverages are possible in some cases. Aggregating structures will certainly experience a marked erosion of retentions, with corresponding increase of riskiness for the remainder of their respective risk periods and pressure on secondary market pricing. A noticeable impact is expected on private transactions, where especially aggregate retrocession and sidecar instruments could suffer. The Solidum Funds do not invest in private aggregate retrocession contracts or the typical sidecars exposed to US risks.

For further details please refer to our event report.