Wildfire cat bond news

Electrical utility Sempra Energy is back in the catastrophe bond market with what will be its third issuance and this time it is seeking a larger, perhaps $180 million or bigger, SD Re Ltd. (Series 2021-1) transaction.

California based utility the Los Angeles Department of Water and Power (LADWP) has finally secured $30 million of wildfire insurance cover from its second catastrophe bond issue, after the Power Protective Re Ltd. (Series 2021-1) deal was priced at the raised coupon level.

Demonstrating that catastrophe bond funds and investors won’t buy into risk at any cost, we’re told that the second California wildfire cat bond from the Los Angeles Department of Water and Power (LADWP), the still unsized Power Protective Re Ltd. (Series 2021-1), has seen its price guidance rise considerably.

The Los Angeles Department of Water and Power (LADWP) has returned to the catastrophe bond market in search of its second cat bond to provide it with wildfire insurance protection, with an as yet unsized Power Protective Re Ltd. (Series 2021-1) being offered to insurance-linked securities (ILS) funds and investors.

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.