Palm Re Ltd. (Series 2025-1)

This will be the second Palm Re Ltd. catastrophe bond from P&C insurer Florida Peninsula Insurance Company, which is seeking $175 million of capital markets backed collateralized Florida named storm reinsurance to cover itself and its subsidiaries.

We understand that Florida Peninsula Insurance Company, a specialist property underwriter in the state, is seeking protection for itself and its subsidiaries Edison Insurance Company and the Ovation Home Insurance Exchange with its second catastrophe bond.

Palm Re Ltd., a Bermuda based special purpose insurer (SPI), will offer a single tranche of Series 2025-1 Class A notes, that are designed to provide the company with indemnity based Florida named storm reinsurance on a per-occurrence basis and over a three year term running from June 1st.

The $175 million of Palm Re Series 2025-1 Class A cat bond notes would attach their coverage at $1.045 billion of losses to the ceding companies and protect a share of losses up to exhaustion at $1.445 billion, we are told.

The Class A notes will come with an initial attachment probability of 2.08%, an initial base expected loss of 1.8% and the cat bond is being offered to investors with spread price guidance in a range from 8.25% to 9%, sources explained.

We’re told this new Palm Re 2025-1 catastrophe bond will see its protection sitting above last year’s 2024-1 issuance in the Florida Peninsula reinsurance tower this year.

The Palm Re 2024-1 notes are said to have been reset to attach at $745 million of losses, providing 50% of coverage across a $300 million layer beneath this new Palm Re 2025-1 cat bond notes.

Update 1:

We’re told that Florida Peninsula has raised the target size range for its new Palm Re 2025-1 cat bond to between $200 million and as much as $250 million of reinsurance.

At the same time the price guidance has been lowered and updated to a range of 7.75% to 8.25%, we understand.

Update 2:

We understand that Florida Pensinsula Insurance has now finalised its new Palm Re 2025-1 catastrophe bond to provide the 43% upsized target of $250 million of fully-collateralized reinsurance protection.

The now confirmed as $250 million of Palm Re Series 2025-1 Class A cat bond notes have been priced to pay investors a spread of 7.75%, so roughly 10% below the mid-point of initial guidance.