CEA secures upsized $770m Ursa Re II 2025-2 cat bond, its third largest ever

The California Earthquake Authority (CEA) has clearly demonstrated its appetite to continue layering efficient reinsurance from the capital markets within its reinsurance tower, by securing the upsized $770 million of limit target from its new Ursa Re II Ltd. (Series 2025-2) catastrophe bond, Artemis understands.

At $770 million in size, this now becomes the third largest catastrophe bond series issuance sponsored by the California Earthquake Authority (CEA), in more than two decades of accessing reinsurance through cat bonds.

The CEA currently has $2.61 billion of outstanding catastrophe bond coverage still in-force. But of that, $505 million are scheduled to mature at the end of November 2025, so this new deal is now set to meaningfully replace that expiring reinsurance limit.

This latest Ursa Re II cat bond will become the 23rd catastrophe bond directly sponsored by the California Earthquake Authority (CEA) that we have listed in our Deal Directory.

This is the California Earthquake Authority’s third catastrophe bond of 2025, having successfully secured $400 million of reinsurance through the Ursa Re Ltd. (Series 2025-1) issuance in February and then a further $400 million of protection through the Ursa Re II Ltd. (Series 2025-1) in June.

Notably, that now means that in 2025 alone the CEA has sponsored some $1.57 billion of catastrophe bonds, building out more capital markets protection within its reinsurance arrangements.

The CEA returned to the catastrophe bond market earlier in November, setting itself an initial target to secure $600 million of reinsurance.

As we then reported, the CEA raised the target for its new cat bond to between $670 million and $770 million of limit, while at the same time the price guidance was reduced for both tranches of notes on offer.

With this new cat bond now priced and heading for settlement of the issuance next week, the Ursa Re II Series 2025-2 cat bond notes will provide the CEA with $770 million of multi-year fully-collateralized California earthquake reinsurance protection, on an indemnity trigger and annual aggregate basis.

What was originally a $200 million Series 2025-2 Class E tranche of notes are now set to provide the CEA with $270 million of reinsurance across a four year term.

They have an initial expected loss of 3.28% and were first offered to investors with price guidance in a range from 5.25% to 6%, which was later reduced to a new range of between 5% and 5.25%, and now these notes have priced at the low-end for a spread of 5% to be paid to investors, we are told.

What was originally a $400 million Series 2025-2 Class FG tranche of notes have been upsized to provide the CEA with $500 million of reinsurance across a roughly two and a half  year term.

These notes have an initial expected loss of 4.81% and were first offered to investors with price guidance in a range from 7.75% to 8.5%, which was later fixed at the low-end of 7.75% and that is where the spread that will be paid to investors has now priced, we understand.

Securing $770 million from this latest Ursa Re II catastrophe bond, adding to the $800 million secured earlier in the year, positions the CEA very well for its reinsurance renewals, as this will build-out the capital markets participation further and shows the CEA making the most of improved issuance conditions to lock-in more multi-year coverage.

But, what is particularly notable and indicative of the soft pricing in the catastrophe bond market at this time, these two tranches come with perhaps the lowest two multiples of expected loss, at issuance, of any cat bonds the CEA has ever sponsored.

When you consider that the CEA has been visiting the cat bond market since 2001, that is particularly telling of price and execution conditions and the significant opportunity these present to sponsors of catastrophe bonds at this time.

A comparable October 2023 tranche of cat bond notes sponsored by the CEA had a similar expected loss to one of these new tranches and the 2025-2 notes version has priced for a spread multiple roughly 46% lower. That’s a meaningful decline over just two years.

With $505 million of the CEA’s currently $2.61 billion of cat bonds scheduled to mature at the end of this month, that means with this new $770 million issuance, the CEA will go into 2026 with $2.875 billion of catastrophe bond backed reinsurance limit available to it.

You can read all about this new Ursa Re II Ltd. (Series 2025-2) catastrophe bond from the California Earthquake Authority (CEA) and every other cat bond ever issued in the extensive Artemis Deal Directory.