Handshake Re Ltd. (Series 2025-1)

Germania Insurance, the largest farm mutual insurance company in Texas, has entered the catastrophe bond market for the first time, seeking fully-collateralized reinsurance from the capital markets through sponsorship of its debut Handshake Re Ltd. issuance.

The company’s debut cat bond will be issued by a Bermuda based entity named Handshake Re Ltd., with the goal being to secure multi-year fully collateralized catastrophe reinsurance capacity from the capital markets, sources said.

Handshake Re Ltd. is offering a single $100 million Class A tranche of Series 2025-1 notes, that will be sold to investors and the proceeds used to collateralize the necessary reinsurance agreement to pass on the coverage to Germania Insurance and certain of its underwriting subsidiaries.

The notes will provide Germania Insurance with a four year source of reinsurance protection against losses from named storms, severe thunderstorms and winter storms in the state of Texas, where Germania operates its business.

The reinsurance protection that the Handshake Re Series 2025-1 catastrophe bond will provide, is structured on an indemnity trigger and per-occurrence basis, we are told.

The currently $100 million of Class A notes that are being offered would attach their coverage after losses exceed $100 million and exhaust protection at $200 million, suggesting no room for this cat bond to be upsized unless the covered layer of Germania’s reinsurance tower is widened.

The Class A notes come with an initial attachment probability of 4.23%, an initial expected loss of 2.11% and they are being offered to cat bond investors with initial price guidance for a spread of between 4.75% and 5.25%, we understand.