Palomar Insurance Holdings has raised the target to as much as $410 million of capital markets backed California earthquake and Hawaii named storm reinsurance from its new Torrey Pines Re Ltd. (Series 2026-1) catastrophe bond issuance, sources have told Artemis.
Palomar Insurance returned to market earlier this month, initially seeking $375 million of California earthquake and Hawaii named storm reinsurance protection with what will be its seventh in the Torrey Pines Re program of catastrophe bonds.
Now, we’re told that the insurer is looking to upsize on the amount of reinsurance its latest cat bond sponsorship will provide, with a target for between $380 million and as much as $410 million of limit now sought.
At the same time, we understand from sources that the price guidance has been updated for all four of the tranches of notes on offer, with the majority now falling or narrowing towards the lower end of their initial spread ranges.
You can read about all of Palomar’s catastrophe bonds in our extensive Deal Directory.
With the latest updates, Bermuda based special purpose insurer (SPI) Torrey Pines Re Ltd. is now offering investors between $380 million and as much as $410 million of Series 2026-1 catastrophe bond notes across the four tranches.
Recall that, three of the tranches of notes are set to provide Palomar capital markets backed reinsurance protection against California earthquake losses, while the fourth tranche targets Hawaii named storm reinsurance for the sponsor.
All four tranches are structured on an indemnity trigger and per-occurrence basis, while the coverage will run for a roughly three-year term.
The Series 2026-1 Class A tranche of California earthquake notes were initially $125 million in size, but are now targeting between $130 million and $160 million of reinsurance for Palomar.
The Class A notes come with an initial expected loss of 1.19% and were first offered to investors with price guidance in a range from 3% to 3.5%. We’re now told that guidance has narrowed to between 3% and 3.25%.
The Series 2026-1 Class B tranche of California earthquake notes have an unchanged target for $100 million of reinsurance for Palomar.
The Class B notes come with an initial expected loss of 2.04% and were initially offered to investors with price guidance in a range from 3.75% to 4.25%. We now understand that guidance has been lowered to a spread of 3.75%.
The Series 2026-1 Class C tranche of California earthquake notes are also still targeted at $100 million in size.
The Class C notes come with an initial expected loss of 4.03% and were first offered to investors with price guidance in a range from 6.25% to 6.75%. That guidance has now also fallen to between 6% and 6.25%.
The final Class D tranche of notes will provide the Hawaii named storm reinsurance protection and remain targeted at $50 million in size.
The Class D notes come with an initial expected loss of 0.96% and were at first offered to investors with price guidance in a range from 2.75% to 3.25%. That guidance has also been lowered, to a revised narrowed range of 2.75% to 3%, sources said.
Palomar has $275 million of earthquake protection maturing this year from previous Torrey Pines Re cat bonds, so it now looks certain the insurer will more than replace that, while also adding more Hawaii named storm reinsurance protection as well.
You can read all about this Torrey Pines Re Ltd. (Series 2026-1) catastrophe bond and every deal issued since 1996 in the Artemis Deal Directory.
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