USAA extends $95m of Res Re 2022-1 cat bond as losses from 24/25 risk period develop

Insurer USAA has extended the maturity dates for two tranches of its Residential Reinsurance 2022 Limited (Series 2022-1) annual aggregate catastrophe bond issuance, amounting to $95 million of notes, which we assume is to allow for continued development of losses from the April 2024 to end of March 2025 risk period.

All four tranches of notes of USAA’s Residential Re 2022-1 catastrophe bond were scheduled for maturity on June 6th 2026.

These cat bond notes were exposed to multiple catastrophe and severe weather events through the annual risk period that ran from April 1st 2024, which had already seen them considered at-risk of losses and marked down on secondary market cat bond pricing sheets.

That annual risk period included numerous large and impactful events, including from 2024 hurricane season activity, wildfires including the Los Angeles outbreak early in 2025, plus severe convective storms (SCS), tornado outbreaks, and other severe and winter weather over the annual term.

After the severe weather and wildfires in 2025, a number of tranches of USAA’s cat bonds came much closer to attaching their coverage for the insurer. As a result, a number remain extended at this time and others are also considered at-risk, in terms of being marked down in the secondary market.

We now believe that $335 million of notes across the Class 13 and 14 tranches of the Residential Re 2022-1 catastrophe bond have been allowed to mature on schedule, allowing the capital to be returned to investors from those two higher layers of aggregate reinsurance risk.

While, the riskier two of the tranches, $35 million Class 11 and $60 million Class 12, have now had their maturity dates extended, presumably to allow for continued development of loss activity, in case any reinsurance recoveries might come due for the sponsor USAA.

The maturity date has now been moved out by three years for the full principal of these two riskier tranches of the Res Re 2022-1 cat bond, now being June 6th 2029.

USAA continues to have in-force aggregate cat bonds from its Residential Reinsurance 2023 Limited (Series 2023-1) and the Residential Reinsurance 2024 Limited (Series 2024-1) issuances that are also marked down, again due to the same 2024/2025 risk period.

Perhaps notably though, there does not appear to be any meaningful markdowns due to the last risk period, from April 2025 through end of March 2026, to the Residential Re catastrophe bonds at this time.

As ever, it’s worth noting that these extensions of maturity are a useful feature for sponsors, ensuring the protection can remain available from a cat bond even some time after the losses actually occurred, to enable claims and loss development to continue, which can be especially important with cat bonds that provide annual aggregate coverage on an indemnity trigger basis, such as these.

Details of catastrophe bonds facing losses, deemed at risk, or already paid out, can be found in our cat bond losses Deal Directory here.