PG&E has been admitted into the California Wildfire Fund (CWF) after emerging from Chapter 11 and depositing some $5bn into the programme’s coffers as its initial and first contributions.
The utility’s Chapter 11 Plan of Reorganization was signed off by the Bankruptcy Court for the Northern District of California last month, and that has paved the way for PG&E to enter the CWF as well as making the various settlements provided for under the proposal.
These settlements, valued at $25.5bn, had been previously agreed with all major wildfire victims’ groups. That $25.5bn total also includes an $11bn settlement with insurance companies and other entities that had paid claims from individuals and business related to the various Californian wildfires of 2017 and 2018.
The ad hoc group of insurers and hedge funds that had bought subrogation rights from carriers had originally filed claims for $20bn, and therefore the $11bn payout that was agreed represents 55 cents on the dollar.
The CWF came into being last year when California governor Gavin Newsom signed a bill. The CWF provides up to $21bn in relief to the Golden State’s three main utilities – PG&E, Sempra and CalEd – should their wildfire losses exceed the greater of the various firms’ insurance coverage or $1bn annually.
The $5bn payment made by PG&E means it has now been admitted into the CWF.
As this publication revealed last month, the California Earthquake Authority (CEA), which is the administrator of the CWF, is out in the market at the moment with its broker Guy Carpenter trying to shop for its $2bn reinsurance coverage. Firm order terms on the unique coverage are due to be submitted imminently.