Farmers Insurance Group has now successfully secured the one-third upsized $400 million of multi-peril US catastrophe reinsurance protection from the capital markets through its new Topanga Re (Series 2025-1) catastrophe bond issuance, Artemis understands.
This transaction was first launched to investors back in October, with Farmers Insurance Group initially targeting a minimum $300 million of per-occurrence catastrophe reinsurance protection from what will be its second Topanga Re cat bond sponsorship.
As we then reported in a first update on this Topanga Re 2025-1 cat bond, Farmers raised its ambitions, with the target size of the issuance growing by one-third to $400 million and the price guidance falling for each of the two tranches of notes on offer.
Now, we’re told that Farmers has achieved this raised goal, in securing the higher level of catastrophe reinsurance, while the notes have priced at the low-ends of their reduced spread guidance.
Encouragingly, given Farmers first Topanga Re 2021-1) cat bond that was issued in late 2021 has $100 million of per-occurrence reinsurance remaining that is scheduled to mature in early January 2026, it’s now clear this new issuance significantly expands Farmers capital markets backed reinsurance from the cat bond market.
So, now finalised and priced the two tranches of Topanga Re Series 2025-1 cat bond notes will provide Farmers and its subsidiary underwriting entities with a $400 million fully-collateralized source of per-occurrence and indemnity triggered reinsurance cover against certain losses from named storms, earthquakes, severe weather and wildfires affecting the United States over a four year term to the end of 2029.
What was initially marketed as a $200 million Class A tranche of notes have been upsized 50% to $300 million in size.
The Class A notes come with an initial base expected loss of 1.47%. They were first offered to cat bond investors with price guidance for a spread in a range from 4.75% to 5.25%, but have now been priced at the lowest-end for a risk interest spread of 4.75%, we are told.
The Class B tranche of notes remained at their initial $100 million in size.
The Class B tranche of notes come with an initial base expected loss of 2.42%. Initially, these notes were offered to investors with price guidance for a spread in a range from 6.25% to 6.75%, which was later reduced to a revised range of between 5.75% to 6.25%. We’re now told these notes priced to pay investors a spread of 5.75%, so below the initially marketed range.
It’s encouraging to learn that Farmers Insurance Group has meaningfully increased its capital markets backed reinsurance protection from the catastrophe bond market this year, with this new deal set to more than replace expiring coverage and run for a further four years, giving plenty of time for the insurer to secure more cat bonds to layer and stagger maturities of the Topanga Re program, should it so choose.
You can read all about this new Topanga Re (Series 2025-1) catastrophe bond and view details on almost every other cat bond ever issued in our extensive Artemis Deal Directory.
