CEA’s risk transfer grew to $8.2bn at Apr 30th. New cat bond maintains ILS market share

The California Earthquake Authority’s (CEA) reinsurance program limit continued to grow through the first four months of 2026, to end April at just over $8.2 billion, with catastrophe bonds at the time providing $2.875 billion of that.

When we last reported on this significant buyer of risk transfer, the California Earthquake Authority (CEA) had grown the tower slightly to $7.912 billion as of the end of 2025, with the catastrophe bond market providing its largest share of the risk transfer limit ever, at 36% of the total.

The California Earthquake Authority’s (CEA) need for risk transfer, which it procures from the traditional and collateralized reinsurance market, as well as through its catastrophe bonds, had been declining as its overall exposure base shrank.

But, in 2025, the CEA’s in-force exposures rose again, from almost $641 billion at the end of 2024, to over $653 billion by the end of 2025, still lower than at the end of 2023, but a notable uptick.

Now, the latest disclosures from the CEA shows that its in-force insurance exposures had risen to over $656.3 billion by the end of April 2026.

This exposure growth has driven a need for more financing and at April 30th 2026 the reinsurance and cat bond risk transfer tower of over $8.2 billion has grown by more than 5% year-on-year.

As of April 30th 2026 and still as of today, the CEA has $2.875 billion of outstanding catastrophe bond coverage still in-force at this time and sits at 5th place in our cat bond sponsors leaderboard. That was flat with the end of 2025

The remaining almost $5.4 billion of risk transfer limit at April 30th 2026 comes from traditional and collateralized or fronted reinsurance arrangements.

The reinsurance component grew through the first four months of 2026, from almost $5.04 billion at December 31st 2025, to almost $5.4 billion as of April 20th 2026, showing that the CEA increased its use of traditional, collateralized or fronted reinsurance at renewals so far this year.

As of April 30th 2026, the catastrophe bond market was providing 35% of the CEA’s risk transfer limit, a slight reduction in share since the end of 2025 but still at the highest amount of cat bond limit the CEA has had in-force.

The CEA had more reinsurance coming up for renewal at May 31st and additional expires at June 30th and July 31st, so the mix may change depending on how the CEA opts to renew treaties.

On the cat bond side, the CEA has just priced and secured $425 million source of fully-collateralized earthquake reinsurance protection this week from its new Sutter Re Ltd. (Series 2026-1) catastrophe bond.

That will fully-replace a maturing $425 million cat bond from 2023 that matures in just over one week, meaning the cat bond component of the risk transfer tower looks set to remain at $2.875 billion for now.

The next catastrophe bond maturities are due at the end of November, when $880 million of cat bond coverage will expire for the CEA, so we’d expect to see the insurer back in the market again.

Notably, the CEA has also been benefitting from the softening of the reinsurance market, having made a roughly $70 million year-on-year saving on risk transfer expenses by March 2026.

Risk transfer expenses have now risen slightly, as of the April 30th 2026 reporting date, with increased limit purchased the main driver.

But, as a percentage of direct premiums earned risk transfer expense had fallen by 9% in the last two years for the CEA, thanks to slightly lower exposures and the softer reinsurance and cat bond pricing environment.

It will be interesting to see how the mix of capital sources changes within the CEA’s risk transfer tower over the coming months, as with traditional renewals around the mid-year and at the end of September, followed by the $880 million of cat bond maturities at the end of November, the insurer will have a chance to maximise the effect of softer pricing and adjust its mix, if it so chooses.

Read all about the CEA’s new $425 million Sutter Re Ltd. (Series 2026-1) catastrophe bond.

The CEA has $2.875 billion of outstanding catastrophe bond coverage still in-force as of today, sitting 6th in our cat bond sponsors leaderboard.

View details of every catastrophe bond sponsored by the CEA in the Artemis Deal Directory.