Merna Re II Ltd. (Series 2021-1)

The Artemis Catastrophe Bond and Insurance-linked Securities Deal Directory aims to provide a one-stop resource for information on every cat bond and ILS transaction we hold information on. The content of this Deal Directory is provided as is and there will be some omissions. Help us to keep these cat bond and ILS transaction summaries up to date by contacting us if you see an error or omission that you can correct.

Share

Merna Re II Ltd. (Series 2021-1) – At a glance:

  • Issuer: Merna Re II Ltd.
  • Cedent / sponsor: State Farm
  • Placement / structuring agent/s: Unknown
  • Risk modelling / calculation agents etc: Unknown
  • Risks / perils covered: U.S. earthquake
  • Size: $350m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: Apr 2021

Merna Re II Ltd. (Series 2021-1) – Full details:

US primary insurance giant State Farm has again returned to the 144A catastrophe bond market for another slice of New Madrid earthquake reinsurance protection to sponsor its latest capital markets deal, a $350 million Merna Re II Ltd. (Series 2021-1) issuance.

As with all recent Merna Re cat bonds sponsored by State Farm, the issuance has been relatively privately placed with a select group of initial investors, although the resulting $350 million of notes are now more broadly available on the cat bond secondary market.

This is now the sixth year in succession where State Farm has chosen to source collateralized reinsurance capacity from insurance-linked securities (ILS) funds and investors on a privately marketed and placed basis.

From 2016 onwards State Farm has followed this club deal approach, electing to have its new cat bond transactions marketed more closely held, to a select group of catastrophe bond investors.

The use of catastrophe bonds for reinsurance protection at State Farm hasn’t changed though, with the Merna Re transactions continuing to provide the insurer with cover against losses from New Madrid zone earthquakes.

Merna Re II Ltd., a Bermuda domiciled special purpose insurer, has issued and sold $350 million of Class A notes to cat bond funds and ILS investors, with the proceeds used to collateralize an underlying reinsurance agreement between the issuer and the sponsor State Farm.

The notes will provide State Farm with earthquake reinsurance against losses from events in the New Madrid fault region on an indemnity trigger and we expect per-occurrence basis, with the protection running across a three-year term to early April 2024.

We understand from sources that the notes have an expected loss of around the 1.8% mark, which makes them riskier than the last two years of Merna Re earthquake cat bond notes.

The notes were priced to pay investors a coupon of roughly 3.75%, we understand.

———————————————————————
Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

Print Friendly, PDF & Email

« Go back to the Catastrophe Bond Deal Directory

Help us keep this valuable resource up to date. If you have information on a catastrophe bond or insurance-linked security deal we have not covered or can see something that we should change, please contact us to let us know.