Moody’s has changed its rating outlook of California Earthquake Authority’s (CEA) Series 2006-B revenue bonds to stable from negative.

Moody’s senior credit officer Kevin Lee said: "As we noted in our March 4, 2010 rating action, CEA's rating outlook would likely return to stable if it demonstrated an ability and willingness to maintain its claims-paying capacity at a level that would cover modelled losses for at least a 1-in-500 year earthquake."

The ratings agency said since the last rating action, modelled losses have gone down as a result of changes to EQECAT's earthquake model, allowing the CEA to increase in-force exposures and reduce claims-paying capacity without exceeding the 1-in-500 year level.

As of April 30, 2011, CEA estimated it had sufficient claims paying capacity to withstand a 1-in-516 year modelled earthquake.

The CEA was created by the California Legislature in 1996 to enhance availability of residential earthquake insurance following the Northridge Earthquake.

The CEA is a privately financed, publicly managed entity that offersresidential earthquake insurance in California through participating insurance companies.