$MCY gained a big bump in its stock price over the last year due to the land grab approach of writing premium in CA when larger competitors left the state. The only thing they didn't account for was the left tail risk. Now they are over exposed. Even if the damages from this event don't wipe them out, their business model is impaired indefinitely. They began to trade at a premium to book value bc they were growing fast. Now that growth no longer continues, how quickly will this re-rate back toward book value at a minimum? It'll be a lower BV as stated today since there are at least ~$500M in losses before exceeding the upper limit of the reinsurance. Then it'll probably trade at a discount to that lowered BV due to a suboptimal business model, no growth, negative earnings, and still the inherent risk of having all these policies (especially with the newly stated moratorium until 2026).
$MCY likely has ~60% downside conservatively. 100% downside if they exceed that upper limit of the reinsurance. Possible considering the huge increased exposure added over the last 12mo.