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Merna Re II Ltd. (Series 2023-2)

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Merna Re II Ltd. (Series 2023-2) – 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: Texas named storms
  • Size: $200m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: Apr 2023

Merna Re II Ltd. (Series 2023-2) – Full details:

This transaction came to market in April as part of primary insurance giant State Farm’s first visit to the catastrophe bond market for reinsurance in 2023.

The company has sponsored two series of Merna Re II catastrophe bonds to secure additional collateralized property catastrophe reinsurance capacity from the capital markets.

State Farm has used its Merna Re II Ltd. special purpose insurer based in Bermuda for this transaction.

This second series of cat bond notes issued for State Farm in April 2023 are a Merna Re Ltd. Series 2023-2 issuance of Class A notes, sized at $200 million.

The notes will provide a source of multi-year indemnity and per-occurrence reinsurance protection to State Farm.

These notes provide State Farm with named storm reinsurance protection specifically for the state of Texas, over a three-year term to the end of June 2026, we understand.

The attachment probability for these notes is 4.03%, while the expected loss is 3.39%.

We understand the $200 million of Series 2023-2 Class A notes issued by Merna Re II will come with a spread that has now been priced at 10.25%.

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