Home insurance carrier Hippo has announced estimated losses from the January 2025 Los Angeles, California wildfires of $42 million pre-tax, net of reinsurance recoveries and subrogation, also revealing that it has agreed to sell its subrogation rights specific to its portion of losses from the Eaton wildfire.
The insurer’s $42 million wildfire loss estimate includes assessments from the California FAIR Plan, and also includes around $12 million related to non-Hippo programs supported by its Spinnaker fronting operation, with $30 million attributed to the Hippo Home Insurance Program.
This month, Hippo signed an agreement to sell its subrogation rights specific to losses from the Eaton outbreak, which the firm expects to result in gross savings of approximately $15 million and $11 million on a net basis, which is included in the above loss estimate.
“We believe the proceeds from this sale compare favorably with what we could have achieved by pursuing our subrogation claims through the legal system,” confirms Hippo.
From what we understand, not many carriers are opting to sell their subrogation rights as they seem to feel they’ll benefit more by pursuing them, although this clearly isn’t the case for Hippo. But by selling the rights to subrogation early, Hippo can get the capital without the potentially months or year or so wait.
“As a native of Southern California, these events are deeply personal to me,” said Hippo President and CEO, Rick McCathron. “I am proud of Hippo’s quick and compassionate response—arranging temporary housing, offering accelerated payouts, and collaborating with our builder partners to find ways to shorten the rebuilding process.”
It’s been reported that there’s strong evidence the Eaton wildfire was caused by utility equipment, and last month, US insurer Mercury General said that it will “aggressively pursue subrogation” for the Eaton event.
Subrogation concerns the right held by most insurers to legally pursue an at-fault third party that caused a loss to an insured, enabling the carrier to recover the amount of the claim paid to the insured for the loss.
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