CEA now seeking to double Ursa Re 2025-1 cat bond size to $400m

Artemis has learned that the California Earthquake Authority (CEA) has now increased the target size for its latest catastrophe bond for a second time, lifting its initial Ursa Re Ltd. (Series 2025-1) offering by 100% to provide $400 million in multi-year collateralized California earthquake reinsurance protection, while the price guidance remains fixed at 7.5%.

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.

As we reported in our first update on this new deal, the target size was increased to between $325 million and $375 million, while at the same time, the price guidance had been fixed at 7.5%.

Now, sources have told us that a second increase to the target size for this new catastrophe bond has occurred, with now $400 million of multi-year collateralized California earthquake reinsurance protection being sought by the CEA.

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, were first increased to between $325 million and $375 million in size, but have now increased further to $400 million, we are told.

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 since then the price guidance has been fixed at 7.5%, so the top of the initial range.

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

As a reminder, 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.