The California Earthquake Authority’s (CEA) traditional reinsurance limits total $5.037 billion at the end of 2025, plus $2.875 billion in effective catastrophe bond protection, bringing the entity’s total risk transfer limits to $7.912 billion, up from about $7.67 billion at the end of September.
In recent years, as the overall risk base has decreased, the size of China Eastern’s risk transfer tower has also decreased. However, CEA’s effective exposure actually increased to more than $653 billion by the end of 2025 from $641 billion at the end of 2024, although still below the level at the end of 2023.
Following reinsurance renewal in April 2025, total insurance coverage in force for CEA’s risk transfer towers increased to approximately $7.8 billion, declining slightly to $7.67 billion as of September 30, 2025.
Latest data from the CEA showed total reinsurance limits in effect at $7.912 billion as of December 31, 2025, having increased in the last three months of the year.
Among them, approximately US$5.037 billion, or 36%, came from the traditional reinsurance market, accounting for 64% of the total, and the remaining US$2.875 billion, or 36%, came from the catastrophe bond market.
More than $2.5 billion of traditional reinsurance limits have expired on December 31, 2025, and the remaining limits will expire between March 31 and September 30. Of course, CEA renews its reinsurance coverage at January renewals and gets protection at renewals in April and mid-year, so its risk transfer tower may have changed and may be adjusted further in the coming months.
In addition, CEA’s $1.305 billion catastrophe bond program matures this year, so it will be interesting to see whether the agency returns to the capital markets again this year for a risk transfer program as catastrophe bonds have become a core part of its reinsurance protection.
CEA’s total claims-paying capacity was $19.7 billion as of December 31, 2025, an increase from $19.1 billion a year earlier. At its most recent meeting, the Commission approved the continuation of a claims payment target corridor of at least 1 in 350 years and no higher than 1 in 500 years through 2026.
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