Filed Under:Risk Management, Loss Control

Swiss Re issues $925M earthquake catastrophe bond for California

Known for its earthquakes, California received a multi-million catastrophe bond from Swiss Re Capital Markets. (Photo: Shutterstock)
Known for its earthquakes, California received a multi-million catastrophe bond from Swiss Re Capital Markets. (Photo: Shutterstock)

Swiss Re Capital Markets placed an issuance of $925 million to be used for the protection of the California Earthquake Authority (CEA).

Swiss Re Capital Markets underwrote the transaction through two classes of principal-at-risk variable rate notes issued by Ursa Re Ltd., each as amended.

The transaction is one of the largest annual catastrophe bonds, and the CEA is well prepared to handle the economic consequences of potential earthquakes.

Related: Earthquake impact could double for Northern and Southern California

Reinsurance agreements


The CEA entered into two reinsurance agreements with Ursa Re Ltd. receiving protection on an indemnity, annual aggregate basis, against residential homes for earthquake damage in California. Ursa Re Ltd. collateralised its liabilities under the reinsurance agreements via the issuance of $425 million Class B notes and $500 million Class E notes to capital markets investors. Both classes of notes have a three-year risk period starting May 17, 2017.

"Swiss Re is pleased to provide continued support to the CEA on its largest catastrophe bond issuance to date," said Judy Klugman, Co-Head of ILS at Swiss Re Capital Markets. "We were also glad to be able to support the CEA in its desire to make future issuances more efficient by introducing pre-modeled Program Notes."

Swiss Re Capital Markets acted as the sole structuring agent and joint bookrunner. Ursa Re Ltd. is a Bermuda-based exempted company licensed and registered as a special purpose insurer under the Bermuda Insurance Act 1978.

Related: California offering grants to strengthen homes against earthquakes

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