Merna Re Enterprise II Ltd. (Series 2026-1)

State Farm has returned to the catastrophe bond market in 2026 and we’re told has now secured a significant $1.5 billion of catastrophe reinsurance protection from its latest sponsorship.

Two $750 million tranches of Series 2026-1 notes have been issued by State Farm’s Bermuda based special purpose insurer (SPI) Merna Re Enterprise II Ltd., a structure the insurer registered earlier this year for this visit to the cat bond market.

The two tranches of notes have been sold to catastrophe bond funds and investors, with the proceeds used to collateralize the multi-year reinsurance agreements for State Farm.

The Merna Re Enterprise II 2026-1 cat bond notes will provide State Farm a $1.5 billion roughly three year source of collateralized reinsurance protection, running to maturity in early July 2029, we’ve learned from sources.

We do not know the covered perils for these new Merna Re Enterprise II 2026-1 cat bonds yet, but there is a good chance they are multi-peril focused given their size, and clearly cover US catastrophe perils given State Farm’s operations.

We also do not know yet whether these cat bond notes are providing per-occurrence or annual aggregate coverage, but they are expected to be providing their reinsurance on an indemnity trigger basis to State Farm, as all of its cat bonds have in the past.

Merna Re Enterprise II Ltd. has issued a $750 million tranche of Series 2026-1 Class A notes and for now all we know is that the initial risk interest spread they will pay investors is said to be 6.25%.

Merna Re Enterprise II Ltd. has also issued an equal sized $750 million tranche of Series 2026-1 Class B notes, of which again all we know is that the initial risk interest spread they will pay investors is said to be 9.25%.

We will update this page as any further details on perils and coverage structure emerge.

Update 1:

We learned that the issuer was actually Merna Re Enterprise II Ltd., a new structure that was registered for State Farm earlier this year. This page has been updated to reflect that name.

We now know that both tranches of Series 2026-1 notes issued by Merna Re Enterprise II Ltd. will provide State Farm with the roughly three years of reinsurance protection on an annual aggregate and indemnity trigger basis.

The covered perils and regions for these cat bond tranches are both US and DC (excluding California) windstorm, hail, tornado, hurricane, tropical cyclone, earthquake and winter storm, sources said.

We’ve also learned that the Class A notes have an initial attachment probability of 1.99% and initial expected loss of 1.58%, while the Class B notes attachment probability is 4.04% and expected loss 2.62% (again underscoring the fact the Class B layer is the riskier of the two).