LADWP secures $100m 123 Lights Re wildfire cat bond priced at low-end of guidance

Artemis has learned that the Los Angeles Department of Water and Power (LADWP), the largest municipal utility operating in the United States, has now priced its latest catastrophe bond, securing $100 million of wildfire protection from its 123 Lights Re Ltd. (Series 2025-1) deal, with the notes priced at the bottom end of initial guidance.

This marks LADWP’s third catastrophe bond issuance, as the utility first ventured into the market in 2020 to secure $50 million of cover from a Power Protective Re Ltd. (Series 2020-1) deal, a transaction that utilised a parametric trigger.

In 2021, LADWP then ventured back into the cat bond market to secure $30 million of wildfire protection with a Power Protective Re Ltd. (Series 2021-1) issuance, a transaction that utilised an indemnity trigger.

Read about all of the LADWP’s catastrophe bonds by filtering our extensive Deal Directory by sponsor.

The LADWP returned to the cat bond market in July, initially looking to secure between $100 million and $150 million of wildfire protection from this 123 Lights Re deal.

As we reported in our first update on this deal, the utility revised its target size for its third cat bond to $100 million, so the low-end of its original target, while the price guidance for the cat bond notes fell to the bottom end of its initial range.

Now, we’ve learned from sources that the LADWP’s new cat bond has been priced, to secure it the targeted $100 million of wildfire protection, which will provide the utility with coverage on a county-weighted industry loss index basis for wildfire events in the state of California over a roughly three year term until the end of August 2028.

The now confirmed $100 million in Series 2025-1 notes that are being offered by Bermuda based company 123 Lights Re Ltd, come with an initial modelled attachment point of 2.76%, and an initial modelled expected loss of 2.02%.

The notes were first offered to cat bond investors with price guidance for an initial risk interest spread of between 11% and 12%, which at the first update was revised to 11%, and this is where we now understand the notes have been priced, so at the bottom-end of initial guidance.

This marks a strong return to the catastrophe bond market for LADWP, as the utility managed to achieve solid execution by prioritising price over size with its latest issuance to secure additional wildfire insurance protection from the capital markets.

Since the January 2025 wildfires in the Los Angeles region of California there have now been three cat bonds sponsored for which CA wildfire risks are the main exposure.

That is the most California wildfire cat bond issuance since 2021, when there were also three transactions. You can see every California wildfire catastrophe bond in our Deal Directory by filtering the list by peril.

As a reminder, you can read all about this 123 Lights Re Ltd. (Series 2025-1) catastrophe bond and every other cat bond deal in the extensive Artemis Deal Directory.