CEA now seeking up to $400m of reinsurance from Ursa Re II 2025-1 cat bond

The California Earthquake Authority (CEA) has raised the target size for its latest catastrophe bond, with now between $300 million and $400 million of earthquake reinsurance limit sought from this Ursa Re II Ltd. (Series 2025-1) issuance, Artemis has learned.

The California Earthquake Authority (CEA) returned to the catastrophe bond market in May with an initial target to secure $250 million of earthquake reinsurance protection from investors through this deal.

As we said at the time, this is the first time the Ursa Re II special purpose insurer has been used by the CEA since late 2022, with this new issuance set to become the 22nd catastrophe bond directly sponsored by the California Earthquake Authority (CEA) that we have listed in our Deal Directory.

Now, we’ve learned that the CEA has raised its target and is looking to secure between $300 million and as much as $400 million of reinsurance limit from this Ursa Re II 2025-1 cat bond issuance.

Recall that, this Ursa Re II Series 2025-1 cat bond will provide the CEA with a three-year source of fully-collateralized California earthquake reinsurance protection, on an indemnity trigger and annual aggregate basis.

The now targeted between $300 million and $400 million of Class G notes on offer will come with an initial expected loss of 4.88% and they were first offered to investors with price guidance in a range from 8.5% to 9.25%.

We’re now told that the price guidance has been revised to a single figure of 9%, suggesting the notes will pay investors a spread within the initial guidance range, although slightly above the initial mid-point of it.

Based on the revised risk interest spread of 9%, it suggests investors may get paid a multiple-at-market of just over 1.84 times the expected loss.

For comparison, the Ursa Re 2025-1 cat bond notes issued earlier this year have an initial expected loss of 4.05% and priced at 7.5%, so offered investors a spread multiple of 1.85 times EL.

The CEA has $2.455 billion of cat bond backed reinsurance in-force at this time, our catastrophe bond sponsor leaderboard shows.

But with a $245 million Ursa Re II Series 2022-1 cat bond scheduled to mature in June, this new issuance now looking set to upsize suggests the CEA will increase its cat bond backed reinsurance that is outstanding once this new offering settles.

You can read all about this new Ursa Re II Ltd. (Series 2025-1) catastrophe bond from the California Earthquake Authority (CEA) and every other cat bond ever issued in the extensive Artemis Deal Directory.