With Farmers Insurance Group having secured $400 million of multi-peril US catastrophe reinsurance protection through its new Topanga Re (Series 2025-1) catastrophe bond issuance, Thomas Noh, CFO of Farmers Insurance Exchange stated that the issuance marks an important component of the company’s risk management strategy.
In December 2021, Farmers sponsored its debut catastrophe bond, that saw the company secure a $160 million source of collateralized reinsurance which provided the company with multi-year occurrence and aggregate cover across peak perils through a Topanga Re Ltd. (Series 2021-1) issuance.
With Farmers’ Topanga Re Ltd. (Series 2021-1) issuance set to mature at the end of this year, it was safe to say that that this new Topanga Re Series 2025-1 issuance was a renewal of sorts, with Farmers looking to build on this with a larger deal to run for an additional four years.
The second visit to the cat bond market was successful for Farmers, as the Topanga Re Series 2025-1 cat bond both upsized and priced at lower spread levels than were initially targeted.
With the cat bond recently settling, Farmers Insurance Exchange’s Chief Financial Officer Thomas Noh has expressed his satisfaction in the execution achieved for the firm’s second cat bond sponsorship.
“Farmers is pleased to access the capital markets via this catastrophe bond issuance which allows us to diversify our capital sources and manage risk,” Noh explained.
“Obtaining multi-year collateralized capacity through Topanga Re is an important component of our risk management strategy.”
Swiss Re Capital Markets and Howden’s capital markets and insurance-linked securities (ILS) specialist unit, Howden Capital Markets & Advisory (HCMA), acted as joint structuring agents and joint bookrunners for the transaction.
Jean-Louis Monnier, CEO of Swiss Re Capital Markets, commented: “Swiss Re is proud to have advised Farmers in structuring and placing this innovative catastrophe bond, which demonstrates how the ILS market can act as a complement to traditional reinsurance by providing top and sideways cover.”
Adding: “Acceptance of this drop-down mechanic demonstrates investors’ increased sophistication and willingness to support clients like Farmers, allowing the ILS market to better align with traditional reinsurance.”
Philipp Kusche, Co-Head of Global ILS and Chairman of HCMA Europe said: “HCMA is honored to have assisted Farmers in structuring and placing its second—and largest—catastrophe bond issuance to date through the Topanga Re vehicle.
“The transaction attracted strong support from a broad base of investors at efficient pricing and provides Farmers with comprehensive coverage across a wide range of perils. This issuance underscores Farmers’ commitment to maintaining its position as a leading and consistent sponsor in the catastrophe bond market,” Kusche continued.
As a reminder, 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.
