Baupost Group, the hedge fund run by Seth Klarman, received more than $3 billion in July from its bet on insurance claims against PG&E Corp. connected to a series of deadly California wildfires, according to people with knowledge of the matter.

The payout yielded Baupost’s biggest profit generator last month and represented a sizable markup from what the firm had anticipated, it told investors Thursday. The fund bought $6.8 billion of subrogation claims against PG&E, court documents show.

Baupost acquired some of the claims at about 35 cents on the dollar, Bloomberg previously reported, so its profit on the trade could have approached $1 billion. But the gains were partly offset by losses on the firm’s equity holdings in the utility company, one of the people said, asking not to be identified because the information is private.

A spokeswoman for Boston-based Baupost declined to comment.

In a subrogation claim, an insurer sells the right to sue to recoup damages suffered by policyholders. Insurers offer the claims at a discount to investors in return for the certainty of being paid upfront.

PG&E entered bankruptcy in January 2019 facing massive liabilities from blazes blamed on its equipment that scorched Northern California in 2017 and 2018. The fires killed more than 100 people and destroyed tens of thousands of structures.

The utility, insurers and claims holders including Baupost reached a deal last September that would bring the investors $11 billion in cash, an arrangement approved by a federal judge. A spokesman for fire victims at the time called the accord a blatant move by the utility and insurers “to help wealthy hedge funds and Wall Street.”

PG&E also agreed in December to pay $13.5 billion to fire victims. Half was paid with shares from the publicly traded utility, which emerged from bankruptcy in July.

The subrogation-claims distribution lifted Baupost’s cash balance to 38% of net asset value from 31%, the people said

The fund, which gained roughly 10% in the second quarter, manages almost $30 billion.

Photo: Paradise, Calif., Nov. 12, 2018. (AP Photo/John Locher)