Wildfire cat bond news

California electrical utility Southern California Edison has been approved to buy up to $1 billion of liability insurance protection for third-party wildfire-related claims, with catastrophe bonds approved as a structure it can use to secure some of the necessary limit.

The Caldor Fire in California’s Eldorado County exploded yesterday, with extreme wildfire behaviour seen to drive the fire’s burn area up by more than 360% to 30,000 acres, while a number of northern California towns saw structure loss that has yet to be counted.

The Dixie wildfire that is burning in California has now burned almost half a million acres and continues to put significant property value at-risk, with now 1,027 structures reported as having been destroyed by the fire.

For the second year running the California Wildfire Fund has shied away from buying reinsurance or any form of risk transfer, saying that current market pricing means it isn’t economically worthwhile to extend the Fund’s durability.

A new report on wildfire resilience insurance suggests that in order to help make wildfire insurance more accessible and affordable, a combined ecological forestry approach alongside parametric risk transfer could reduce wildfire losses for the insurance and reinsurance sector.

The first ever parametric solely wildfire exposed catastrophe bond to hit the market, the $50 million Power Protective Re Ltd. (Series 2020-1)  transaction being sponsored on behalf of a municipal water and electricity utility operating in the Los Angeles area, has seen its pricing move up by around 9% before it closed.

An intriguing new catastrophe bond transaction has launched to the market according to our sources, with the $50 million Power Protective Re Ltd. (Series 2020-1)  transaction being sponsored on behalf of a municipal water and electricity utility operating in the Los Angeles area of California that is seeking wildfire insurance protection.

Quotes received from the reinsurance market at the mid-year renewals did not deliver on the pricing and structure that was sought for the California Wildfire Fund, resulting in the purchase of risk transfer not being completed.

The first California wildfire catastrophe bond transaction to be issued since the severe California season of 2018 has successfully been upsized, with utility Sempra Energy’s SD Re Ltd. (Series 2020-1) deal now set for $90 million.

Electrical utility Sempra Energy is seeking to upsize its second catastrophe bond, with the SD Re Ltd. (Series 2020-1) transaction now targeting a $90 million source of California wildfire insurance protection from the capital markets for the company.