Palomar ups quake cover target to $200m from Torrey Pines Re 2023-1 cat bond

Palomar Insurance Holdings is the latest to upsize its ambitions for its latest catastrophe bond, with the catastrophe-exposed property insurer now seeking $200 million of US earthquake reinsurance from this Torrey Pines Re Ltd. (Series 2023-1) issuance.

Palomar returned to the catastrophe bond market in late April, aiming to secure $150 million or more in collateralized and multi-year earthquake reinsurance protection.

This is the fourth Torrey Pines catastrophe bond from the speciality California-headquartered insurer that provides largely catastrophe exposed property products.

With this Torrey Pines Re 2023-1 catastrophe bond, Palomar is seeking both California specific and also US-wide earthquake reinsurance protection, across a three-year term and on an indemnity and per-occurrence basis from the capital markets.

The size target has now increased by one-third we’re told, jumping from $150 million to $200 million, as Palomar looks to capitalise on strong current investor appetite for cat bonds to secure more reinsurance protection.

What was a $100 million Class A tranche of California earthquake risk exposed notes are now targeted as $150 million in size, we understand, so the source of the upsizing for this new cat bond from Palomar.

The Class A California quake notes have an initial expected loss of 0.90% and were first offered with price guidance in a range from 5.25% to 5.75%, but we’re told that has now been reduced to a range of 5% to 5.25%.

The Class B tranche of notes that will provide US-wide earthquake cover remain at $50 million in size, sources said.

With their initial expected loss of 2.38%, the Class B notes were first offered with price guidance in a range from 8.25% to 8.75%, but that has now also been lowered to a range of 7.5% to 8.25%, we understand.

Given current cat bond market conditions, it seems likely Palomar will secure an upsized amount of earthquake reinsurance from this new Torrey Pines Re cat bond, with pricing at least at the bottom end of initial guidance, perhaps below it.

You can read all about this Torrey Pines Re Ltd. (Series 2023-1) catastrophe bond and every deal issued since 1996 in the Artemis Deal Directory.