California FAIR Plan secures $750m Golden Bear Re, the largest wildfire cat bond ever

The California FAIR Plan Association has now successfully priced and secured what will become the largest catastrophe bond exposed to wildfire risks ever, as the Golden Bear Re Ltd. (Series 2026-1) issuance will provide it $750 million of reinsurance, Artemis can report.

At the same time, the risk interest spread that the California FAIR Plan Association will pay for the $750 million of wildfire reinsurance was priced at the bottom end of the twice reduced guidance, indicating a roughly 11% decline in the spread to be paid from the initial mid-point.

This Golden Bear Re Ltd. catastrophe bond is therefore a landmark deal in the marketplace, demonstrating growing cat bond investor appetite for the wildfire peril and acceptance for the risk even in a year where a major event occurred.

This Golden Bear Re 2025-1 catastrophe bond is now confirmed to be the largest pure wildfire catastrophe bond ever issued, at more than triple the size of the previous largest, which was $200 million back in 2018.

Our data shows that there are only $350 million of pure wildfire risk exposed catastrophe bonds in-force at this time.

So, impressively, once this first cat bond for the California FAIR Plan settles, the amount of pure wildfire cat bonds outstanding in the market will be elevated to $1.1 billion, the highest figure ever for the peril in the cat bond market’s history by a significant margin.

To recap how this issuance went for the last resort insurer for wildfire exposed properties in California, the California FAIR Plan Association began its first-time catastrophe bond offering sponsorship back in November.

At first the target was to secure at least $250 million in reinsurance from this Golden Bear Re cat bond, but as we reported in our first update, the California Fair Plan’s target for wildfire reinsurance from its debut catastrophe bond increased, with the offering size raised to between $350 million and $500 million, while the price guidance was narrowed towards the lower-end of the initial range.

Then, in our second update, we reported that the size target was raised significantly to $750 million of reinsurance for the California FAIR Plan, while at the same the price guidance fell to the bottom of the original range of spreads on offer.

In a third update, we reported that the target remained to secure $750 million of fully-collateralized California wildfire reinsurance for the FAIR Plan, but the spread price guidance was opened back into a range at an even lower level.

Now, we can report that the $750 million of notes that Golden Bear Re will issue have now been priced and the wildfire reinsurance coverage has been secured for the California FAIR Plan at the bottom end of the reduced guidance, which was a roughly 11% decline from the mid-point of initial price guidance.

So, Golden Bear Re Ltd. will issue and sell to cat bond investors a $750 million single tranche of Series 2026-1 Class A notes.

The notes will provide the California FAIR Plan with $750 million of capital markets backed reinsurance protection covering wildfire losses in the state of California on an indemnity trigger and per-occurrence basis, over a three year term running to the end of 2028. The Class A notes have an initial expected loss of 2.24%.

At first, the notes were offered to investors with spread price guidance in a range from 10.5% to 11.5%, which first fell to a revised range of 10.5% to 11%, was then fixed at 10.5%, but then opened back into a lower range at between 9.75% and 10.5%.

Now, we understand the $750 million of Class A notes have been priced to pay investors an initial risk interest spread of 9.75%, so right at the bottom of the reduced price guidance.

So that is a roughly 11% price decline over the marketing of the largest wildfire catastrophe bond ever issued, showing investor appetite for new paper and growing confidence in the peril at the same time.

This new deal will take the number of pure wildfire catastrophe bonds issued this year to four, which is the most we’ve ever recorded in our Deal Directory.

Wildfire risk remains a relatively small component of the cat bond market in its purest form, of cat bonds solely exposed to wildfire risks Artemis data shows, but this large issuance will grow that and as a result the wildfire peril offers more diversification for investors and cat bond funds.

Given the success of this first cat bond for the California FAIR Plan Association, we suspect this will be a good example of other insurers and entities carrying significant wildfire exposure, that the cat bond market is well and truly open for wildfire business.

You can read all about this new Golden Bear Re Ltd. (Series 2026-1) catastrophe bond and view details on almost every other cat bond ever issued in our extensive Artemis Deal Directory.