AIG, Allstate Are Among Insurers With PG&E Bets, Goldman Sachs Says

(Bloomberg) -- Coverage insurers have limited exposure to PG&E Corp. bonds through their investment portfolios, Goldman Sachs analyst Yaron Kinar wrote in a note earlier after the California utility said Monday it intendsto file for bankruptcy later this month. Shares of the utility were down 18 percent as of 11:33 a.m. in New York after its volatility halt, adding to its losses of more than 52 percent Monday.

American International Group Inc. and Allstate Corp. have greatest exposure to PG&E bonds though their investment portfolios at about 50 basis points of “statutory surplus,” according to Kinar. Other insurers that have exposure to PG&E bonds include Travelers Companies Inc., Hartford Financial Services Group, Arch Capital Group Ltd. and Chubb Ltd.

Property & casualty insurer reserves don’t expect recoveries/subrogation from PG&E even though several insurers filed suits against the utility, asserting that PG&E is liable for the wildfires. Goldman sees limited downside to insurers it follows through the liability side of their balance sheet if the utility is unable to pay insured loses.

“Some insurers sold their legal claims at a discount to third parties, thereby eliminating uncertainty over recoveries regardless of PG&E’s legal status,” Kinar wrote.

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