Press Release - NOVEMBER 21, 2018

Best’s Briefing: Insurers Have Limited Exposure to PG&E Volatility from California Wildfires

 Jason Hopper
Associate Director,
Industry Research and Analytics
+1 908 439 2200, ext. 5016
Christopher Sharkey
Manager, Public Relations
(908) 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
(908) 439 2200, ext. 5644


The U.S. insurance industry holds approximately 23% of the debt, totaling $4.1 billion, issued by PG&E Corporation, the California utility whose equipment is being investigated as having a potential role in the deadly Camp Fire, according to a new A.M. Best briefing.

The Best’s Briefing, titled, “Insurers Have Limited Exposure to PG&E Volatility from California Wildfires,” states that approximately 10% of insurers have some exposure to PG&E bonds. Overall, single-company exposure is limited, as just 5% of the total number of entities, or 23 companies, have exposure of more than 5% of capital and surplus, led by Monarch Life Insurance Company at 47.8%, and MedAmerica Insurance Company of New York at 45.9%. Two-thirds of the total amount of entities have exposures totaling less than 1% of capital and surplus. Nearly 90% of the industry’s PG&E exposure is held by companies A.M. Best rates A- (Excellent) or higher, while 4% of PG&E exposure is held by companies not rated by A.M. Best. A.M. Best also does not rate nearly half of the entities with exposures greater than 5% of capital and surplus.

At issue is whether utilities should be held liable for damages caused by wildfires linked to their power lines, even if the companies did nothing wrong. PG&E has filed two incident reports since the fire began and has seen about half its market value, or approximately $12 billion, vanish in little more than a week, prompting concerns that a bankruptcy situation could emerge.

The utility company has $18 billion of unsecured bonds; in the event of a bankruptcy, the payment priority of these bonds would be equal to that of the roughly $30 billion in potential liabilities that analysts have estimated from the 2017 and 2018 wildfires. Additionally, rules governing the existing bond issues state that the unsecured notes also would become secured if PG&E were to take on at least $5 billion of new debt secured by its assets, which could result in current bondholders wanting the company to issue more secured debt if doing so could put them ahead of wildfire claims.

To access the full copy of this briefing, please visit .

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry.