AM Best says PG&E bankruptcy won’t hit specialist insurers hard

Utility focused specialty insurers “should be able to absorb the losses” arising from exposure to to PG&E’s bankruptcy, AM Best has said.

The energy supplier filed for Chapter 11 bankruptcy at the end of January after it warned it could face “significant liability” - of $30 billion or more - which would exceed its insurance cover if investigators find the company's equipment had caused the Camp Fire in California.

However, AM Best said exposure for insurers was “within risk appetites” even though claims are likely to encompass direct wildfire damage, as well as directors and officers liability related to the bankruptcy filing.

AM Best said the exposure was reduced because specialty insurers that insure PG&E have a “limited risk appetite and have sub-limits in place that will help limit the risk of volatility arising from these exposures” and because “these companies are well-capitalized”. As a result, AM Best does not expect insurers’ credit ratings to be affected.