NU Online News Service, Aug. 8, 3:04 p.m. EDT

The California Earthquake Authority (CEA) last week turned to the capital markets and tapped a new special-purpose vehicle to securitize its risk, a move which is credit-negative for the reinsurance industry, according to Moody's Investors Service.

In its Weekly Credit Outlook, Moody's says the transaction is credit-positive for the CEA, as the bonds were issued at a lower cost than the CEA's comparable protection from the traditional reinsurance market. Moody's notes that the CEA is "one of the biggest buyers of earthquake reinsurance in the world."

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