Hawaiian Electric Industries Inc., the utility owner of Hawaiian Electric, experienced a significant drop in its stock value after issuing a going-concern warning. This comes as the company continues to grapple with the aftermath of a devastating wildfire on Maui last year, which resulted in multiple casualties and the destruction of the historic town of Lahaina.

In a statement released late on Friday, Hawaiian Electric Industries revealed that it is compelled to disclose a going-concern risk in its financial statements until it formulates a viable plan to meet its settlement obligations. The estimated accrual of liabilities stemming from the wildfire disaster has been projected at a staggering $1.7 billion.

As a consequence, the shares of the company plummeted by as much as 22% on Monday, marking the largest intraday decline since the month of the fire in August 2023. At 11:35 a.m. in New York, the stock was down 16% and trading at $13.03.

Earlier this month, Hawaiian Electric Industries announced that it had agreed to pay nearly $2 billion as part of a $4 billion settlement aiming to resolve hundreds of lawsuits related to the fatal 2023 blazes. The company's executives shared that the payment will be made in four equal installments, with the first installment expected no earlier than mid-2025.

Hawaiian Electric Industries is the latest in a series of utility owners grappling with substantial financial losses arising from wildfires attributed to power equipment malfunction. Pacific Gas and Electric Company (PG&E) sought bankruptcy protection in 2019 after its power lines caused devastating fires in California, while PacifiCorp, a subsidiary of Berkshire Hathaway Inc., faced liability costs in the hundreds of millions of dollars due to wildfires in Oregon in 2020.

The financial strain brought about by these claims has raised concerns among investors regarding the long-term financial viability of electric companies operating in areas characterized by high fire risk.

The wildfire on Maui ravaged approximately 2,200 structures, primarily homes, and tragically claimed the lives of 102 people. A damage assessment report from last year estimated that the disaster incurred a capital cost of $5.5 billion.

Hawaiian Electric Industries now faces the arduous task of managing its financial obligations resulting from the wildfire catastrophe. The company's ability to develop a sustainable plan to meet its settlement responsibilities will be closely monitored, as stakeholders and investors seek reassurance about its future stability amidst this challenging period.