Fitch Ratings has affirmed the “A” rating on California Earthquake Authority’s outstanding fixed-rate revenue bonds, which mature on July 1, 2016, citing the organization’s ability to cover losses for at least a one-in-500-year earthquake.
Fitch has also affirmed CEA’s issuer default rating at “A.” The rating outlook is stable.
CEA had $9.5 billion in sources of funds to pay claims at June 30. Included was $3.9 billion in available capital, as well as the proceeds from the revenue bonds, reinsurance and post-earthquake industry assessments, Fitch stated.
CEA’s principal risk is a catastrophic earthquake large enough to exhaust its claims-paying resources and requiring it to access the capital markets or other sources in order to pay claims, according to Fitch.
The total claims-paying resources are estimated to cover losses for a one-in-529-year earthquake, or a probability of resource exhaustion of 0.19 percent.
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