State Farm completes Merna Reinsurance II catastrophe bond

by Artemis on April 9, 2010

State Farm has completed it’s latest catastrophe bond issue Merna Reinsurance II Ltd. The deal began being marketed at a value of $250m and completed at $350m. That’s well below the mooted $400m-$700m that the market was expecting but we believe that was wishful thinking due to the size of their previous Merna Re deal. It transpires that State Farm didn’t feel they needed to maintain the same level of capital in the new deal so brought it to market at $350m.

Investors were oversubscribed to the deal so it’s believed that State Farm could have transferred more of their risks if they had wanted to. The deal utilises an indemnity based trigger and provides State Farm with cover for earthquake risks in the U.S. Risk Management Solutions are providing risk modelling services and Aon Benfield structured the deal.

Full details can be found in the Artemis Deal Directory.

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