Farmers Insurance has successfully closed a $160 million 144A catastrophe bond completed through Topanga Re Ltd.
The company entered into a multi-year reinsurance arrangement with Topanga Re, a newly established special purpose insurer in Bermuda which provides Farmers with indemnity-based coverage.
The catastrophe bond was designed to integrate into Farmers’ existing traditional catastrophe reinsurance program.
Swiss Re Capital Markets and TigerRisk Capital Markets & Advisory acted as joint structuring agents, with Swiss Re Capital Markets also acting as sole bookrunner and TigerRisk Capital Markets & Advisory as co-manager.
“Farmers is pleased to access the capital markets via this catastrophe bond issuance which allows us to diversify our capital sources by distributing different levels of risk,” said Thomas Noh, chief financial officer of Farmers Insurance Exchange. “Obtaining multi-year collateralized capacity from Topanga Re is an important addition to our risk management strategy.”
Topanga Re issued two tranches of notes as part of the offering, $100 million of Series 2021-1 Class A Notes and $60 million of Series 2021-1 Class B Notes.
Full details of the transaction can be viewed on the Topanga Re Ltd. (Series 2021-1) page of the Artemis Deal Directory.
“Swiss Re is proud to have advised Farmers in structuring and placing its first-ever catastrophe bond. Investors welcomed the innovative subrogation extension mechanism as it better aligns potential ILS recoveries with those of traditional reinsurance,” said Jean-Louis Monnier, Head of Retro & ILS structuring at Swiss Re Capital Markets. “This innovation was essential to allow Farmers to efficiently complement its per-occurrence and aggregate reinsurance programs with an ILS issuance.”
Philipp Kusche, Global Head of ILS and Capital Solutions at TigerRisk Capital Markets & Advisory, added: “TigerRisk is delighted to have supported Farmers in its inaugural catastrophe bond transaction expanding their risk transfer options further. We were pleased to advise in the establishment of Topanga Re which provides Farmers comprehensive reinsurance coverage on a per-occurrence and aggregate basis.”