Shares of Lemonade, Inc. fell 9% to $31.37 on January 10, 2025, as investors assessed the company's exposure to the wildfires raging through Southern California. The decline occurred as the fires, which began on January 7, 2025, raised concerns about potential losses for insurers.
According to a KBW report, almost a quarter of Lemonade's direct premiums are exposed to the infernos. Industry-wide losses from the fires were estimated to be around $20 billion, with individual companies potentially experiencing losses up to $1 billion.
The market reaction reflects investor apprehension regarding the financial impact of catastrophic events on insurance providers with significant exposure in affected regions, highlighting the inherent risks in the insurance business.
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