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# CEA Pushes For Multi Year Cat Deals, Alters Ratings Hurdle
- URL: https://www.riskmarketnews.com/cea-pushes-multi-year-cat-deals-alters-ratings-hurdle/
- Published: 2014-12-22T06:25:26.000Z
- Updated: 2014-12-22T06:25:26.000Z
- Author: Chris Westfall
- Tags: calfornia, catastrophe bond, earthquake, Markets

The **California Earthquake Authority** (CEA) will focus in expanding its “transformer” reinsurance and catastrophe bond program by focusing on multi-year agreements, according to documents from last week’s board meeting.

Separately, the CEA revised its ratings tables for acceptable providers.

Focusing on reinsurance and catastrophe coverage over several renewal seasons — as well as hitting the minimum claim-paying capacity of a 1-in-450-year — will be the walking orders of CEA staff as they shop for reinsurance coverage in the new year.

“In 2014, the CEA continued to diversify its risk-transfer program by executing several multi-year reinsurance contracts, which together provide the CEA with uninterrupted long-term financing at lower prices,” according to a staff memo from the December 17, 2014 board meeting. “Multi-year contracts reduce the risk of a single year’s market conditions’ preventing the CEA from obtaining risk-transfer capacity at suitable pricing, on favorable terms.”

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In 2014, the California’s earthquake insurance backstop entered into 13 new risk-transfer contracts, five of which were multi-year. “CEA’s risk-transfer program has provided staff the ability to increase the risk-transfer limit while reducing risk-transfer expense,” the note added.

In another move that will likely impact CEA’s reinsurers, the board approved a change to the fund’s rating tables that are used “calibrate” a reinsurer’s participation level to its ratings and policyholder surplus.

“The Guidelines’ ratings tables should be revised to more accurately reflect rating-systems comparisons among **Moody’s**, **A.M. Best**, and **Standard & Poor’s**,” the staff memo states. “This change will have a positive effect on CEA reinsurers.”

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