Texas Farm Bureau enters cat bond market with $200m Fish Pond Re

Another first-time sponsor has entered the catastrophe bond market and it is the second farm bureau sponsor of recent weeks, with the Texas Farm Bureau Insurance Companies seeking a $200 million source of named storm reinsurance through a Fish Pond Re Ltd. (Series 2024-1) issuance.

This is also notable as the first new catastrophe bond to launch to investors in 2023, but with its settlement date scheduled for 2024, according to our sources.

Texas Farm Bureau Insurance is the insurance arm of Texas’s largest farm organisation, the Texas Farm Bureau, a non-profit focused on its members from the agricultural community.

Earlier this quarter, we saw the North Carolina Farm Bureau enter the cat bond market for the first time, so Texas now becomes the second Farm Bureau cat bond sponsor this year.

For its first cat bond, Texas Farm Bureau Insurance has established a Bermuda based issuer, named Fish Pond Re Ltd.

Fish Pond Re Ltd. will look to issue a single Class A tranche of Series 2024-1 catastrophe bond notes, that will be sold to investors and the proceeds used to collateralize a reinsurance agreement between the vehicle and the Texas Farm Bureau Insurance subsidiaries.

We’re told the covered entities include Texas Farm Bureau Casualty Insurance Company, as well as mutual insurer subsidiaries of the Texas Farm Bureau.

The Class A notes are targeted to provide $200 million in named storm reinsurance protection for the state of Texas, on an indemnity trigger and per-occurrence basis, over a three year term to the end of 2026.

We understand the attachment point for the coverage will be at $1.25 billion of losses, giving the notes an initial attachment probability of 0.176%, an initial expected loss of 0.112% and spread price guidance in a range from 4% to 4.5%.

That’s a remote layer of risk, with a low expected loss, signalling the Texas Farm Bureau’s intention to add efficient capital markets capacity to the very top of its reinsurance tower, perhaps finding cat bond market capacity readily available and efficiently priced.

You can read all about Texas Farm Bureau Insurance’s first catastrophe bond, this Fish Pond Re Ltd. (Series 2024-1) transaction, in our Deal Directory, where you can analyse details of almost every catastrophe bond ever issued.