CEA lifts Ursa Re 2025-1 cat bond target to as much as $375m

The California Earthquake Authority (CEA) has increased the targeted amount of multi-year collateralized California earthquake reinsurance protection it seeks from capital market investors through its new Ursa Re Ltd. (Series 2025-1) issuance, with now up to $375 million of coverage being sought, while the price guidance has been fixed at 7.5%, Artemis has learned.

The CEA recently returned to the catastrophe bond market with an initial target to secure $200 million or more in multi-year collateralized California earthquake reinsurance protection, from what will become the 21st cat bond to be sponsored by the CEA that we have listed in our Deal Directory.

Now, we’re told that an increase to the target size for this new catastrophe bond has occurred, with now $325 million to $375 million of multi-year collateralized California earthquake reinsurance protection being sought by the CEA.

The CEA last sponsored a cat bond in December 2023 and in that year alone the earthquake insurer secured over $1.5 billion of cat bond backed reinsurance from the capital markets.

But, since then with the CEA’s exposure base having declined, so has its need for reinsurance, which resulted in a shrinking of its risk transfer tower, as we’ve reported.

For this new cat bond deal, the CEA is targeting a three-year source of California earthquake reinsurance protection from the capital markets on an indemnity trigger and annual aggregate basis.

What was a $200 million tranche of Series 2025-1 Class F notes are now being pitched at an upsized range between $325 million to $375 million in size.

We are told that the Class F tranche of notes will provide coverage across a $500 million layer of the CEA’s risk transfer tower, while having a $2.1 billion retention in place for the first loss occurrence period.

The Class F notes will come with an initial attachment probability of 4.38%, an initial expected loss of 4.05% and they were originally being offered to investors with price guidance in a range from 6.75% to 7.5%, but sources have now informed us that the price guidance has been fixed at 7.5%, so the top of the initial range.

The CEA is looking to maximise its opportunity to bulk up on reinsurance from the capital markets with this deal, capitalising on the strong demand being seen from the cat bond investor base for new issues.

You can read all about this Ursa Re Ltd. (Series 2025-1) in the extensive Artemis Deal Directory that includes details on almost every cat bond ever issued.