{"id":509,"date":"2025-03-25T10:45:16","date_gmt":"2025-03-25T11:45:16","guid":{"rendered":"http:\/\/alteredconcept.com\/?p=509"},"modified":"2025-03-28T11:54:39","modified_gmt":"2025-03-28T11:54:39","slug":"cat-bonds-move-up-to-contribute-32-of-ceas-smaller-still-7-72bn-reinsurance-tower","status":"publish","type":"post","link":"http:\/\/alteredconcept.com\/index.php\/2025\/03\/25\/cat-bonds-move-up-to-contribute-32-of-ceas-smaller-still-7-72bn-reinsurance-tower\/","title":{"rendered":"Cat bonds move up to contribute 32% of CEA\u2019s smaller still $7.72bn reinsurance tower"},"content":{"rendered":"

This content is copyright to www.artemis.bm<\/a> and should not appear anywhere else, or an infringement has occurred.<\/p>\n

As the California Earthquake Authority (CEA) risk transfer needs have been adjusting and its reinsurance tower shrinking, catastrophe bonds now make up almost 32% of the total as of February 28th 2025.
\n<\/span>
\n\"cea-california-earthquake-authority\"The CEA\u2019s risk transfer tower had sat at just over $9.15 billion of limit as recently as following the June<\/a> 2024 reinsurance renewal season, but has been steadily shrinking ever since.<\/p>\n

The CEA\u2019s risk transfer tower, made up of traditional and collateralized reinsurance as well as cat bonds had totalled $7.99 billion as of Nov 1st 2024<\/a>.<\/p>\n

When we last reported on it, earlier this month based on January 31st information, the California Earthquake Authority\u2019s (CEA) risk transfer tower provided total private market protection of roughly $7.85 billion, of which catastrophe bonds were approximately 31%<\/a>.<\/p>\n

Now, a further disclosure from the CEA shows another small reduction in its traditional or collateralized reinsurance cover , with the overall tower $125 million smaller as of February 28th 2025, at just over $7.72 billion.<\/p>\n

Thanks to its recent sponsorship of the $400 million Ursa Re Ltd. (Series 2025-1)<\/a> catastrophe bond, the CEA still benefits from $2.455 billion of multi-year reinsurance protection provided by cat bond funds and investors.<\/p>\n

The traditional and collateralized reinsurance component of the tower remains much larger at almost $5.27 billion as of February 28th 2025.<\/p>\n

But catastrophe bonds continue to demonstrate their vital importance for the CEA, now being almost 32% of the total tower as of that date.<\/p>\n

Cat bonds were just 25% of the tower as recently as June 30th 2024, which then increased to 28% at November 1st, stayed flat around the 28% mark at January 31st 2025, then 31% after the inclusion of the recent $400 million new cat bond issuance, and now 32% after the latest slight shrinking of reinsurance.<\/p>\n

It\u2019s going to be interesting to see how the CEA\u2019s risk transfer tower adjusts after its April 1st reinsurance renewal date.<\/p>\n

The CEA has almost $1.2 billion of traditional or collateralized reinsurance limit maturing on March 31st and has been in the market for a renewal of some or all of that, we understand.<\/p>\n

The reason for certain non-renewals in the reinsurance tower over recent months is the fact that the CEA\u2019s probable maximum loss at the 1-in-350 year loss event level has been declining at a faster pace that its reinsurance contracts have been coming up for renewal, while it has also been building internal capital as well.<\/p>\n

The CEA has $2.455 billion of outstanding catastrophe bond coverage still in-force at this time, continuing to occupy 3rd position in our cat bond sponsors leaderboard<\/a>.<\/strong><\/p>\n

View details of every catastrophe bond sponsored by the CEA in the Artemis Deal Directory<\/a><\/strong>.<\/p>\n

As we also reported earlier this year, the California Earthquake Authority (CEA) has been exploring the need for either a pre-funded subsequent or second-event funding tower (with risk transfer and reinsurance perhaps a part of it), or the infrastructure for one<\/a>, that would support its functions after a significant earthquake loss that depletes its claims paying ability, with a focus on ensuring financial stability for the long-term.<\/p>\n

Cat bonds move up to contribute 32% of CEA\u2019s smaller still $7.72bn reinsurance tower<\/a> was published by: www.Artemis.bm<\/a>
\nOur catastrophe bond deal directory<\/a>
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