California wildfires to weigh on US insurers’ 2025 profits as catastrophe losses mount

Allstate Corp. (NYSE: ALL) and The Travelers Companies (NYSE: TRV) are reeling from a surge in catastrophe losses in the first quarter of 2025, as a disastrous wave of California wildfires drove a sharp rise in insurance claims. The event prompted analysts to revise full-year forecasts significantly, with catastrophe losses now estimated at $6.6 billion for Allstate—up 24.4% from earlier projections—and $3.8 billion for Travelers, marking a 54.3% increase from analyst estimates prior to the wildfires.

Underwriting profitability has also taken a hit. Consensus estimates from Visible Alpha show Allstate’s underwriting income is expected to -dip 0.2% year-on-year to $3 billion, 10.5% below prior estimates. Travelers is projected to fare worse, with underwriting income expected to plunge 40% to $1.8bn—a 23.5% downgrade from pre-wildfire estimates. Both insurers are also seeing underwriting margins erode. Allstate’s combined ratio—a key profitability metric for insurers—is forecast to rise to 95% in 2025, from 94% last year. Travelers’ combined ratio is expected to worsen more sharply, rising to 96% from 93%.

The earnings blow comes alongside slower top-line growth. Revenue growth for 2025 is forecast to ease to +5% for Allstate to $67.7 billion, and +6% for Travelers to $49.1 billion —highlighting the growing financial strain insurers face from climate-related disasters.