The Texas Farm Bureau Insurance Companies has returned to the catastrophe bond market for its second sponsorship, seeking $250 million of named storm reinsurance from a Fish Pond Re Ltd. (Series 2026-1) issuance that looks set to be a renewal of its soon to mature debut cat bond deal, we have been told.
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.
The organisation sponsored its debut catastrophe bond in late 2023, securing $255 million of Texas named storm reinsurance protection from the Fish Pond Re 2024-1 issuance.
That first cat bond sponsorship for the insurer is scheduled to mature at the end of this year. As a result, this new Fish Pond Re 2026-1 offering appears to be a renewal of that reinsurance protection.
For its second cat bond sponsorship, Texas Farm Bureau Insurance is again using its Bermuda based special purpose insurer (SPI), named Fish Pond Re Ltd.
Fish Pond Re Ltd. is targeting issuance of two tranches of Series 2026-1 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.
As with the first Fish Pond Re cat bond, we’re told that the covered entities include Texas Farm Bureau Casualty Insurance Company, as well as mutual insurer subsidiaries of the Texas Farm Bureau.
The initial target is to secure $250 million of named storm reinsurance protection covering the state of Texas, on an indemnity trigger and per-occurrence basis. This time, the term of coverage being sought is longer, as a four year deal compared to the three year’s of coverage from the debut cat bond, with these new notes set to remain on-risk through to the end of 2030.
A currently $125 million tranche of Series 2026-1 Class A notes would attach their coverage at $825 million of losses and exhaust it at $1.425 billion, giving the notes an initial attachment probability of 0.4%, an initial expected loss of 0.26% and the initial spread price guidance is in a range from 2.25% to 2.75%, we understand.
A currently also $125 million tranche of Series 2026-1 Class B notes are riskier, in attaching their coverage at $325 million of losses and exhaust it at $825 million, giving the notes an initial attachment probability of 1.91%, an initial expected loss of 0.88% and they come with initial spread price guidance in a range from 3% to 3.5%, sources said.
The debut cat bond for the Texas Farm Bureau saw a single tranche issued that attached coverage initially at $1.25 billion and had an initial expected loss of 0.112%, pricing to pay investors a spread of 4% in the end.
Comparing a cat bond from pricing in late 2023 when the reinsurance market was hard is challenging, but as you’d expect the multiples on offer look comparably much lower, given the softened pricing environment of today.
It’s good to see the Texas Farm Bureau returning to maintain its catastrophe bond coverage within its reinsurance tower, suggesting the sponsor recognises the value of diversifying its risk transfer with the support of capital market investors.
You can read all about Texas Farm Bureau Insurance’s second catastrophe bond, this Fish Pond Re Ltd. (Series 2026-1) transaction, in our Deal Directory, where you can analyse details of almost every catastrophe bond ever issued.
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