California public utility company PG&E has said it hopes to recover around $375mn from its insurers over damage caused during a spate of wildfires in the state in the second half of last year.
The figure, revealed in an investor update yesterday (21 June), will hit the company’s liability coverage from carriers, which contains a limit of $840mn in excess of a self-insured layer of $10mn and further retentions of $40mn.
“This amount reflects an assumption that the cause of each fire is deemed to be a separate occurrence under the insurance policies. The amount of the expected receivable is also subject to change based on additional information, which change could occur prior to the filing of the Form 10-Q,” the firm said.
“PG&E Corporation and the Utility intend to seek full recovery for all insured losses and believe it is reasonably possible that they will record a receivable for the full amount of the insurance limits in the future.”
PG&E is potentially on the hook for millions of dollars of liability losses relating to the start of the fires, which the California Department of Insurance has estimated caused nearly $12bn worth of damage.
The company said it plans to take a $2.5bn charge on its second quarter earnings in relation to expected claims stemming from 14 of the fires in the Northern part of the state.
Given the uncertain nature over liability for the thousands of claims involved in the process, it also warned that it could take years for the eventual scale of the insurable loss to become clear.
That procedure is also likely to involve some draining legal battles, as PG&E is facing approximately 200 complaints on behalf of at least 2,700 plaintiffs related to the Northern California wildfires in San Francisco court.
Last month the state’s department of forestry and fire protection said that trees coming into contact with power lines of PG&E had caused the four fires in Butte and Nevada counties, placing the blame for billions of dollars worth of damage at the firm’s feet.
In its annual report PG&E revealed that it had received $350mn from insurers relating to the Butte fire. Then, the utility company’s first quarter results unveiled a further $197mn insurance payment relating to the same blaze bringing the total received from carriers for that fire alone to $547mn.
In total, PG&E said it had $922mn of cover that related to the Butte fire, adding that it expected to exhaust the policy limits.
The utility company also said it had paid reinstatement premiums on its liability cover of $64mn in the wake of the fires, adding a further $630mn of protection.