CEA increases risk-transfer program by $76 million at April renewals

By Michael Loney

June 6 - (The Insurer) - The size of the California Earthquake Authority’s risk-transfer program increased to around $7.8 billion as it secured $1.2 billion of traditional reinsurance cover at the April renewals.

Materials for an advisory panel meeting on June 5 showed that as of the end of April the CEA had a $7.797 billion total risk-transfer program, with $5.342 billion of traditional reinsurance and $2.455 billion of transformer reinsurance.

At April 1 it secured $1.209 billion of traditional reinsurance in a $1.2 billion contract and $9.4 million contract.

In last April’s renewals the CEA had secured $1.133 billion of cover over six contracts.

The risk transfer program is up from $7.721 billion as of the end of February, which consisted of $5.266 billion of traditional reinsurance and $2.455 billion of transformer reinsurance.

The CEA has reinsurance contracts that renew in January, April, June, August and October.

The meeting materials did not provide details of this year’s June renewals.

The CEA had four contracts with $305.5 million of cover up for renewal at June 1. It also has two catastrophe bonds providing $70 million and $175 million of cover that expire on June 9.

The authority has reduced the size of its risk transfer program in recent years as its policy count and exposure has declined.

The risk transfer program at the end of 2023 had sat at $9.06 billion, with $6.79 billion from traditional reinsurance and $2.27 billion from transformer reinsurance.