Farmers Insurance completes $160m inaugural cat bond

Farmers Insurance Group has placed its inaugural catastrophe bond, which provides it with $160 million of coverage against named storms, earthquakes, fires and other severe weather events that affect US territories.

The bond was issued by Topanga Re, a special purpose vehicle incorporated in Bermuda, on behalf of Farmers Insurance Group. It consists of two classes of principal at-risk variable rate notes, including $100 million of per-occurrence protection across a 4-year risk period and $60 million of annual aggregate protection across a 2-year risk period. This transaction also includes an innovative 4-year subrogation extension mechanism to benefit and protect investors.

Swiss Re Capital Markets acted as the joint structuring agent and sole bookrunner on the deal.

Jean-Louis Monnier (pictured), Head of Retro & ILS Structuring of Swiss Re's Alternative Capital Partners, said: “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. This innovation was essential to allow Farmers to efficiently complement its per-occurrence and aggregate reinsurance programs with an ILS issuance."

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