Palomar raises Torrey Pines Re 2025-1 cat bond target to as much as $525m
Palomar Insurance Holdings has raised the target size for its new Torrey Pines Re Ltd. (Series 2025-1) catastrophe bond issuance, with now as much as $525 million of California earthquake reinsurance limit being sought from the capital markets through this deal.
That’s an almost 24% increase from the initial target to secure $425 million in reinsurance when this Torrey Pines Re 2025-1 catastrophe bond was first marketed to investors, as we reported earlier this month.
As we stated at the time, at the initial $425 million size this new cat bond would already have been the largest sponsored by Palomar Insurance Holdings to-date, but now with up to $525 million in protection sought that appears more than confirmed.
Last year, Palomar sponsored its largest catastrophe bond with the $420 million Torrey Pines Re 2024-1.
You can read about all of Palomar’s catastrophe bonds in our extensive Deal Directory.
As well as increasing the target size for its latest catastrophe bond deal, we understand the price guidance for two of the three tranches of notes that are being offered have now fallen to the low-end of their initial ranges.
This new Torrey Pines Re 2025-1 catastrophe bond will provide Palomar with capital markets backed reinsurance protection against California earthquake losses, on an indemnity and per-occurrence basis across a three year term, to the start of June 2028.
What was initially a $125 million Series 2025-1 Class A tranche of notes are now targeted at between that level and $150 million in size, we are told..
The Class A notes have an initial expected loss of 1.22% and were first offered to investors with price guidance in a range from 3.5% to 4%, which at this stage has not changed, with the range still being open.
What was a $175 million Series 2025-1 Class B tranche of notes are now targeted to provide $200 million in coverage for Palomar, we understand.
The Class B notes come with an initial expected loss of 1.84% and were first offered to investors with price guidance in a range from 4.5% to 5%, but that has now been moved to the low-end of 4.5%.
What was a $125 million Series 2025-1 Class C tranche of notes are now targeted to secure $175 million in coverage for Palomar, sources said.
The riskiest layer, these Class C notes come with an initial expected loss of 3.25% and were initially offered to investors with price guidance in a range from 6.5% to 7%, but that has also now been reduced and fixed at the low-end of 6.5%.
With as much as $525 million of fully-collateralized reinsurance from the capital markets now targeted with this new Torrey Pines Re 2025-1 catastrophe bond, Palomar is looking to deepen the participation of cat bond investors in its reinsurance tower.
Recall that the insurer’s $275 million Torrey Pines Re 2022-1 matures this year, so this new issuance will now much more than replace that, growing the role of the capital markets in Palomar’s reinsurance arrangements.
You can read all about this Torrey Pines Re Ltd. (Series 2025-1) catastrophe bond and every deal issued since 1996 in the Artemis Deal Directory.
