In one of the first damage reports from the early George Floyd protests in Philadelphia and other cities, owners of the Walgreens chain told investors they are out $75 million for uninsured “store damage and inventory losses as a result of looting in the U.S. during May 2020.”
The analysis arrived as city business insurance brokers reported a jump in the rates that property and casualty insurers charge landlords to cover Philadelphia properties, though some cautioned other factors are also pushing up prices.
The Walgreens expense doesn’t include insured losses, which the chain did not disclose. Walgreens has 4,600 stores, including 19 in Philadelphia, several of which had windows broken and lost piles of merchandise to looters as city police struggled to respond.
Insurers have paid an estimated $1 billion in all for “riot” damages in local protests since 1965, according to Property Claims Services, an industry group. Insurers are bracing for new claims across the U.S. that they expect could total at least that much. Still, the group expects “manageable” losses compared to major hurricanes, which have cost tens of billions.
More than two months after the looting, Walgreens retail stores at 1809 E. Allegheny Ave. in Kensington and 300 N. 63rd St. in Overbrook remain closed, though their pharmacies are open supplying prescription drugs, said Fiona Ortiz, a Walgreens spokesperson.
Four of rival Rite Aid’s 79 Philadelphia-area stores also remain closed since they were damaged, with pharmacy services handled from other locations, spokesperson Chris Savarese said Friday. Five others reopened last month.
CVS, which had 40 stores damaged nationwide, including several in the city, said all its Philadelphia stores have reopened.
The uninsured losses total around about 8% of Walgreens’ quarterly profit, with more from June still to be disclosed, said Carol Levenson, research director at Gimme Credit LLC, which tracks bonds issued by Walgreens and other big companies.
Levenson said Walgreens is among the first publicly traded retailers to disclose damages from the spring looting because of its unusually early reporting period, which ended May 31. Other companies with looting losses are scheduled to report for quarters ending June 30 in the weeks ahead.
Drugstores, athletic shoe sellers, and beauty supply stores were among thieves’ frequent targets.
DTLR Villa, a Maryland-based chain that sells athletic shoes and other gear, has reopened its South Street store, and has open locations in Norristown and King of Prussia, but nine other Philadelphia stores remain shut, executive vice president Jeff Bowden said Friday. Rivals such as Footlocker and City Blue were also hit.
“We’re working with the insurance companies and with the landlords” and with repair contractors to reopen stores, Bowden told me. The chain’s Olney store building burned down. “We want to be there. All indications are the landlord wants to rebuild. They’re working with their insurance company.”
“The pause in civil authority” unnerved insurance underwriters, who prefer more predictable risks, said Brian Gilberg, vice president at Odell Studner Group LLC, a King of Prussia insurance broker whose clients include landlords and developers.
The result was like “a moratorium on placing policies in Philadelphia. You could not bind some policies” on small construction projects as scheduled, once looting reports began filling the news, Gilberg said.
He was able to find his clients alternate insurance, but the pause reminded him of the way insurers sometimes delay new policies when hurricanes threaten shore towns. “Insurers are like everyone else — they are unsure, they are scared, there is uncertainty,” Gilberg said.
For example, a landlord with 5,000 apartments in the Philadelphia area was recently quoted a renewal that provided half the coverage for almost the same price he paid last year, said Sean H. Brogan, managing director at Graham Co., a Philadelphia commercial insurance brokerage. “Underwriters have what they call ‘crime scores’ ” that can make a city more expensive when they think it has become riskier.
Does that sound like old-fashioned “redlining,” the now-illegal practice when financial companies refused to do business in neighborhoods because poor or Black people lived there?
Brogan said it’s hard to separate carriers’ reactions to looting losses from other economic pressures — including pandemic business closures and a string of catastrophic insurance losses in 2016 to 2019 — that were already driving insurance renewal costs higher this year before the looting.
Some in Washington say they are trying to help. In an unusual political alliance, U.S. Sen. Pat Toomey (R., Pa.) and Philadelphia’s U.S. Rep. Dwight Evans, a Democrat, this week said they plan to introduce and rally bipartisan support for a “Helping Entrepreneurs Access Loans (HEAL) Act” offering “75% forgivable” loans to small businesses “destroyed or damaged” between May 26 and July 1 —- the period when rioting broke out.
“Many of the businesses destroyed at the end of May in Philadelphia and other cities across America were already facing mounting difficulties due to the COVID-19 pandemic,” Toomey said in a statement.
Evans called the proposal “a lifeline” to minority-owned and other businesses in city neighborhoods blighted by looters, and called for its passage in Congress.