Palomar closes $400m cat bond covering earthquake risk through Torrey Pines Re
Palomar Specialty Insurance Company and Palomar Excess and Surplus Insurance Company (PESIC), two wholly-owned subsidiaries of Palomar Holdings, have closed a $400 million 144A catastrophe bond through Torrey Pines Re.
Palomar entered into a multi-year reinsurance arrangement with Torrey Pines Re, a special purpose insurer established in Singapore, that sees Torrey Pines Re provide indemnity-based reinsurance covering earthquake events to Palomar. The catastrophe bond was designed to seamlessly fit into Palomar’s existing traditional catastrophe reinsurance programme.
Torrey Pines Re issued two tranches of notes as part of the financing, including $200 million of class A notes and $200 million of class B notes. Both provide protection against earthquakes in the covered area over a three-year risk period.
The $400 million offering was upsized from the initial announcement size of $300 million.
GC Securities and TigerRisk Capital Markets & Advisory acted as joint structuring agents and joint bookrunners, while MMC Securities acted as the sole initial purchaser.
Mac Armstrong, chairman and chief executive officer of Palomar, said the multi-year protection enables the business to strengthen its reinsurance programme and provide enhanced visibility into its results.
He added: “The Torrey Pines Re transaction allows Palomar to further build upon its leadership position in the earthquake insurance space. We believe the success of the issuance reflects catastrophe bond investor confidence in our ability to underwrite this line of business.”
Heath Fisher, president of Palomar, said investors had welcomed its return to the catastrophe bond market. “This outcome underscores the differentiated nature of our insurance portfolio and strong demand for innovative earthquake products,” Fisher said. “We pride ourselves on the strength of our reinsurance programme, and this issuance represents an important component of our strategy that affords multi-year, insurance-linked securities capacity to bolster our panel of reinsurance capital providers.”
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