Palomar Insurance Holdings has now successfully priced its seventh catastrophe bond sponsorship, securing $410 million of capital markets backed California earthquake and Hawaii named storm reinsurance from its new Torrey Pines Re Ltd. (Series 2026-1) issuance, Artemis can report.
The insurer began its cat bond journey in 2017 with a multi-peril issuance as its first Torrey Pines Re deal, after which the next five covered earthquake risks only, focused largely on California exposures each time.
But returning in 2026, Palomar expanded the coverage to include named storm reinsurance for Hawaii as well in this latest offering.
You can read about all of Palomar’s catastrophe bonds in our extensive Deal Directory
Palomar Insurance returned to the cat bond market returned to market earlier this month, with its initial target being to secure $375 million of California earthquake and Hawaii named storm reinsurance protection from the seventh in the Torrey Pines Re program of catastrophe bonds.
As we reported in our first update on this deal, the insurer looked upsize on the amount of reinsurance its latest cat bond sponsorship will provide, with a target for between $380 million and as much as $410 million of limit, while the price guidance was updated for all four of the tranches of notes on offer, with the majority falling or narrowing towards the lower end of their initial spread ranges.
Now, Palomar has priced the four tranches of notes to lock-in the upper $410 million target amount of reinsurance, while most of the tranches priced down as well, we have now learned from sources.
As a result, Bermuda based special purpose insurer (SPI) Torrey Pines Re Ltd. is now set to issue and sell to investors $410 million of Series 2026-1 catastrophe bond notes across the four tranches.
Three of the tranches of notes will provide Palomar capital markets backed reinsurance protection against California earthquake losses, while the fourth tranche will provide Hawaii named storm reinsurance for the sponsor.
All four tranches are structured on an indemnity trigger and per-occurrence basis, while the $410 million of catastrophe reinsurance coverage will run for a three-year term for Palomar, from June 1st this year to June 2029.
The Series 2026-1 Class A tranche of California earthquake notes began as a $125 million offering, after which Palomar raised the target to between $130 million and $160 million of reinsurance and these have now been confirmed at the upper-end of that range, at $160 million in size.
The Class A notes come with an initial expected loss of 1.19% and were first offered to investors with price guidance in a range from 3% to 3.5%, which later narrowed to between 3% and 3.25% and now we understand have priced to pay investors a spread of 3%, so the low-end.
The Series 2026-1 Class B tranche of California earthquake notes did not change in size to provide $100 million of reinsurance for Palomar.
The Class B notes come with an initial expected loss of 2.04% and were initially offered to investors with price guidance in a range from 3.75% to 4.25%, eventually pricing at the low-end again for a spread of 3.75%.
The Series 2026-1 Class C tranche of California earthquake notes also remained at $100 million in size.
The Class C notes come with an initial expected loss of 4.03% and were first offered to investors with price guidance in a range from 6.25% to 6.75%, which fell to between 6% and 6.25% at the first update and have now been priced for a spread of 6%, so below the initially offered range.
The final Class D tranche of notes will provide the Hawaii named storm reinsurance protection and remained at $50 million in size throughout their offering.
The Class D notes come with an initial expected loss of 0.96% and were at first offered to investors with price guidance in a range from 2.75% to 3.25%, which was revised and narrowed to a range of 2.75% to 3% and we’ve now learned were priced to pay investors a spread of 2.75%, so again the bottom end of initial guidance.
As a result, Palomar has been able to upsize the reinsurance from its latest catastrophe bond by 9% to $410 million across the four tranches, while all of the notes priced at the low-ends of initial guidance, or below that in one case. A strong result for this repeat cat bond sponsor.
Palomar has $1.145 billion of cat bond protection outstanding at this time, but with $275 million of earthquake protection maturing this year from previous Torrey Pines Re cat bonds.
That maturing earthquake protection has now been more than replaced and as a result Palomar Insurance will have $1.28 billion of catastrophe bond backed reinsurance in-force once this new deal has settled, the most in the company’s history.
You can read all about this Torrey Pines Re Ltd. (Series 2026-1) catastrophe bond and every deal issued since 1996 in the Artemis Deal Directory.
