California Earthquake Authority lowers pricing again for still $900m Ursa Re 2026-1 cat bond

The California Earthquake Authority’s (CEA) new Ursa Re Ltd. (Series 2026-1) catastrophe bond remains at the upsized $900 million target, but pricing has been lowered again for the notes on offer, as the company targets strong execution with its latest cat bond deal, Artemis understands.

The California Earthquake Authority (CEA) is one of the most consistent sponsors of catastrophe bonds, with this marking the 25th cat bond sponsorship we have tracked from the insurer.

View details of every catastrophe bond sponsored by the CEA in the Artemis Deal Directory.

Initially, the CEA was aiming to secure $600 million of reinsurance protection from this Ursa Re 2026-1 cat bond sponsorship.

In our first update on this transaction, we learned that the CEA was looking to increase the amount of reinsurance limit from its latest deal, with Ursa Re Ltd. offering $900 million of notes across the two tranches of this Series 2026-1 cat bond issuance, a 50% increase from the initial $600 million target.

At the same time, the CEA also looked to capitalise on investor appetite within the market, as the spread guidance for both notes on offer for this deal were reduced.

We’re told that the upsized $900 million target remains, but CEA is still seeking to secure that protection at a more cost-effective rate, as the price guidance has been lowered once again for each of the tranches on offer.

As we’ve previously said, at a $900 million issuance size, Artemis’ data shows that this new cat bond for the CEA is targeted to become the company’s largest since 2017 and the earthquake insurers second largest cat bond sponsorship ever.

Ursa Re Ltd. continues to offer $900 million of earthquake reinsurance limit across the two tranches of cat bond notes on offer. These notes will provide the CEA with a roughly four-year source of fully-collateralized California earthquake reinsurance protection on an indemnity trigger and annual aggregate basis, which is the same trigger structure that CEA’s cat bonds have adopted in the past.

What was a $350 million tranche of Series 2026-1 Class D notes are still targeted at their increased $500 million in size we understand.

These Class D notes have an initial expected loss of 2.68% and they initially offered to cat bond investors with price guidance in a range from 4% to 4.5%, which was first lowered to between 3.75% to 4%, and we’re now told have been lowered to a revised range of 3.5% to 3.75%.

What was initially a $250 million tranche of Series 2026-1 Class H of notes are still targeted at their increased $400 million in size.

The Class H notes come with an initial expected loss of 6.35% and were first offered to cat bond investors with price guidance in a range from 8.5% to 9.5%, which was later revised to lower spread of 8.25% to 8.5%. We’re now told this price guidance has been lowered once again, to a revised range of 8% to 8.25%.

We’ve previously said that we believe the Class H notes have the highest expected loss for any tranche of catastrophe bonds that we have seen sponsored by the CEA.

The CEA looks set to meaningfully capitalise on catastrophe bond market conditions, in being able to secure 50% more fully-collateralized California earthquake reinsurance protection than originally sought.  The decline in pricing is also no surprise given how cat bond issues have been executing of late across the market, as the space remains well-capitalised.

Make sure to visit the Artemis Deal Directory where you can read all about this new Ursa Re Ltd. (Series 2026-1) catastrophe bond from the California Earthquake Authority (CEA) and every other cat bond ever issued.