The California Earthquake Authority’s (CEA) total traditional reinsurance limit amounted to $5.037 billion at the end of 2025, which combined with in-force protection from catastrophe bonds of $2.875 billion, saw the entity’s total risk transfer limit rise to $7.912 billion from around $7.67 billion at the end of September.
In recent years, the size of the CEA’s risk transfer tower had decreased as its overall exposure base reduced. However, as at the end of 2025, the CEA’s in-force exposure actually increased to more than $653 billion from $641 billion at the end of 2024, although is still lower than it was at the end of 2023.
After the 2025 April reinsurance renewals, the CEA’s risk transfer tower grew to around $7.8 billion in total in-force coverage, falling slightly to $7.67 billion as of September 30th, 2025.
The latest data from the CEA shows that as of December 31st, 2025, total in-force reinsurance limit totalled $7.912 billion, so had increased in the final three months of the year.
Of this, roughly $5.037 billion was procured from the traditional reinsurance market, accounting for 64% of the total, while the remaining $2.875 billion, or 36% was from the catastrophe bond market.
Over $2.5 billion of traditional reinsurance limit expired at December 31st, 2025, with the rest set to expire between March 31st and September 30th. Of course, the CEA would have renewed its reinsurance coverage at the January renewals, and also procures protection at the April and mid-year renewals, so its risk transfer tower has likely already changed and will likely be adjusted further in the coming months.
Additionally, $1.305 billion of the CEA’s cat bonds are scheduled to mature this year, so it will be interesting to see if the authority returns to the capital markets for its risk transfer programme again this year, as cat bonds have become a core part of its reinsurance protection.
The CEA had total claim-paying capacity of $19.7 billion as at December 31st, 2025, an increase from $19.1 billion a year earlier. During a recent meeting, the Board approved, for 2026, to continue with a claim-paying target corridor of a minimum 1-in-350 year level and no greater than a 1-in-500 year level.
