Palomar encouraged by investor response to new Torrey Pines cat bond

Palomar Insurance Holdings, the speciality California-headquartered insurer that provides largely catastrophe exposed property products, has expressed its satisfaction at the successful upsizing and closing of its new Torrey Pines Re Pte. Ltd. (Series 2021-1) earthquake catastrophe bond at $400 million.

As we’d previously reported, this new cat bond was Palomar’s first visit to the catastrophe bond market since 2017, when the insurer sponsored a $166 million Torrey Pines Re Ltd. (Series 2017-1) transaction.

Palomar returned to the catastrophe bond market in February, targeting sponsorship of a $300 million earthquake risk only cat bond, using Singapore as the domicile for issuance.

Demand for the cat bond notes helped the insurer to lift the issuance size and so the Singapore based special purpose reinsurance vehicle, Torrey Pines Re Pte. Ltd., successfully issued $400 million of notes, across two tranches.

Both of the tranches of notes issued also saw their pricing decline, to the lowest-end of initial coupon spread guidance, again signalling a successful cat bond execution.

Palomar noted that the indemnity-based reinsurance provided by the catastrophe bond, which covers it for losses from earthquake events, was designed to seamlessly fit into its existing traditional catastrophe reinsurance program.

Mac Armstrong, Chairman and Chief Executive Officer of Palomar, commented on the successful issuance, “The Torrey Pines Re transaction allows Palomar to further build upon its leadership position in the earthquake insurance space. We believe the success of the issuance reflects catastrophe bond investor confidence in our ability to underwrite this line of business.

“The multi-year protection enables us to strengthen our robust reinsurance program and provide enhanced visibility into our results, which in turn benefits our customers, distribution partners and investors.

Heath Fisher, President of Palomar, added, “We are encouraged by the warm investor reception of our return to the catastrophe bond market. This outcome underscores the differentiated nature of our insurance portfolio and strong demand for innovative earthquake products.

“We pride ourselves on the strength of our reinsurance program, and this issuance represents an important component of our strategy that affords multi-year, insurance-linked securities (“ILS”) capacity to bolster our panel of reinsurance capital providers.”

The cat bond backed reinsurance protection will benefit Palomar’s underwriting companies Palomar Specialty Insurance Company and Palomar Excess and Surplus Insurance Company.

We understand that Palomar is set to increase its overall reinsurance program in size this year, with the Torrey Pines cat bond set to play a significant role.

For the insurer, bringing efficient sources of reinsurance capital into its tower helps to provide added capacity to support its continued growth into catastrophe exposed property lines of business.

You can read all about the Torrey Pines Re Pte. Ltd. (Series 2021-1) catastrophe bond and every deal issued since 1996 in the Artemis Deal Directory.