Farmers now aims for up to $400m of reinsurance from Topanga Re 2025-1 cat bond

Farmers Insurance Group is now aiming to secure up to $400 million of multi-peril US catastrophe reinsurance protection from the capital markets through its new Topanga Re (Series 2025-1) catastrophe bond issuance, Artemis has learned.

This deal was first launched to investors back in October and at the time we understood that Farmers Insurance Group was targeting a minimum $300 million of per-occurrence catastrophe reinsurance protection from its second Topanga Re cat bond sponsorship.

Farmers first cat bond sponsorship was completed in late 2021 and the remaining $100 million of per-occurrence reinsurance from that Topanga Re Ltd. (Series 2021-1) is slated to mature in early January 2026.

So it’s encouraging to see the insurer return with a larger deal and even more so to now learn of its ambitions to upsize the coverage from its second cat bond sponsorship.

We’re now told that the target across the two tranches of Series 2025-1 cat bond notes that Topanga Re Ltd. is seeking to issue is for between $350 million and as much as $400 million of reinsurance for Farmers.

The two tranches of Topanga Re Series 2025-1 cat bond notes that are on offer are designed to provide Farmers and its subsidiary underwriting entities with per-occurrence and indemnity triggered reinsurance cover against certain losses from named storms, earthquakes, severe weather and wildfires affecting the United States over a four year term.

What was a $200 million Class A tranche of notes are now targeted at an upsized between $250 million and $300 million in size, we are told.

The Class A notes come with an initial base expected loss of 1.47% and were first offered to cat bond investors with price guidance for a spread in a range from 4.75% to 5.25%. Sources have said the price guidance for these notes has been lowered and fixed at 4.75%.

The Class B tranche of notes remain sized to provide $100 million of reinsurance protection for Farmers, we understand.

The Class B tranche of notes come with an initial base expected loss of 2.42% and were first offered to investors with price guidance for a spread in a range from 6.25% to 6.75%. We’re now told that price guidance has been lowered, still in a range from 5.75% to 6.25%.

As a result, it seems Farmers is open to securing more reinsurance than was initially targeted with its second Topanga Re catastrophe bond, while the pricing is moving in a similar way to all other recent issuances, falling towards the lower-ends of initial guidance or even below that.

You can read all about this new Topanga Re (Series 2025-1) catastrophe bond and view details on almost every other cat bond ever issued in our extensive Artemis Deal Directory.