🚒 LA’s insurance inferno

Up in flames… For days now, fierce wildfires have raged across the Los Angeles area, leading to at least six deaths and forcing tens of thousands of residents to evacuate. Thousands of acres have burned, along with thousands of structures like homes, businesses, and landmarks. The largest of the fires, which primarily affected the Pacific Palisades, is now the biggest in LA’s history.

• Historic heat: The blaze could be the costliest wildfire in US history, causing an estimated $20B+ in insured losses (or nearly double the cost of the last major blaze).

Policies in peril… California’s no stranger to wildfires, but a rise in global temps has made them more frequent and more severe. As a result, major insurers including State Farm and Nationwide have ditched the Golden State, cutting coverage and canceling home-insurance policies in high-risk areas to avoid paying pricey claims. Between 2019 and 2024, the 90272 ZIP code of the Palisades had 28 of every 100 policy renewals denied. Now, nearly 500K Californians rely on the state’s insurer of last resort, FAIR, which lets high-risk homeowners buy fire insurance.

• Short change: The Palisades (FAIR’s fifth-largest policyholder) has nearly $6B in potential claims. But as of last March, the FAIR plan’s cash reserve was sitting at only about $700M.

That’s inconvenient… 7-Eleven’s parent company is struggling to sling Slurpees: Seven & i Holdings said its quarterly net profit plummeted 89% from last year. Sales in Japan, where the company’s based and its shops — or konbinis — are beloved, fared better than its overseas biz. Seven & i maintained its profit forecast for the fiscal year after nearly halving it in October. At that time, Seven & i said it’d shut down 444 underperforming North American stores, citing weak fuel and cigarette sales. 7-Eleven’s plunging profit may pump up the pressure to consider outside help.

Taquit-no… Seven & i rejected a $39B buyout offer from the Canadian owner of Circle K, Couche-Tard, in September. After Seven & i said the offer “grossly undervalued” its biz, Couche-Tard came back with a $47B bid. But this week, Japan’s economy minister said the acquisition of Seven & i by a non-Japanese company is a national-security matter, citing how convenience stores help distribute food during natural disasters. That could make a rival offer from the company’s billionaire heir, Junro Ito, more appealing. The Ito family owns 9% of Seven & i, and in November it started trying to pull together $58B to take the company private.