We’ve learned that State Farm returned to the catastrophe bond market in recent weeks and has now secured a significant $1.5 billion of reinsurance protection through a Merna Re Enterprise Ltd. (Series 2026-1) issuance, which becomes one of the largest cat bond offerings ever.
The insurer opts to have its cat bond deals marketed on a private closed-group, or club basis to just selected investors, so they are not as widely offered in the market as most cat bond deals.
This has benefited State Farm over the years, as it develops deeper relationships with key insurance-linked securities (ILS) investor and cat bond fund markets, while also gathering important pricing indications that can help to inform its broader reinsurance purchases.
State Farm’s Merna Re named catastrophe bonds have all tended to be Rule 144A issues but placed under a closed subscription group for a number of years now and the same is true of this Merna Re Enterprise Ltd. Series 2026-1 offering that we understand was recently priced and has now been settled.
Find details about all of State Farm’s catastrophe bonds in the Artemis Deal Directory.
While details are scarce still, with this $1.5 billion issuance of Merna Re Enterprise Series 2026-1 catastrophe bonds State Farm has secured a significant new source of multi-year and fully-collateralized reinsurance from the capital markets.
This now becomes the joint-third biggest visit ever to the cat bond market by any sponsor, after State Farm’s 2025 cat bonds that amounted to $1.55 billion and Florida Citizens $1.525 billion 2025 Everglades issuance, while also equalling Citizens $1.5 billion 2024 Everglades cat bond.
Two $750 million tranches of Series 2026-1 notes have been issued by State Farm’s Bermuda based special purpose insurer (SPI) Merna Re Enterprise Ltd., a structure the insurer used for the first time in its record 2025 visit to the cat bond market.
The two tranches of notes have been sold to catastrophe bond funds and investors, with the proceeds used to collateralize the multi-year reinsurance agreements for State Farm.
The Merna Re Enterprise 2026-1 cat bond notes will provide State Farm a $1.5 billion roughly three year source of collateralized aggregate reinsurance protection, running to maturity in early July 2029, we’ve learned from sources.
We do not know the covered perils for these new Merna Re Enterprise 2026-1 cat bonds yet, but there is a good chance they are multi-peril focused given their size, and clearly cover US catastrophe perils given State Farm’s operations.
We also do not know yet whether these cat bond notes are providing per-occurrence or annual aggregate coverage, but they are expected to be providing their reinsurance on an indemnity trigger basis to State Farm, as all of its cat bonds have in the past.
Merna Re Enterprise Ltd. has issued a $750 million tranche of Series 2026-1 Class A notes and for now all we know is that the initial risk interest spread they will pay investors is said to be 6.25%.
Merna Re Enterprise Ltd. has also issued an equal sized $750 million tranche of Series 2026-1 Class B notes, of which again all we know is that the initial risk interest spread they will pay investors is said to be 9.25%.
As a result, it’s safe to assume the Class A notes are lower risk, given the lower spread. But given we do not know the structures, or coverage types, we can’t say whether they sit within the same tower of coverage or not.
Prior to these deals, State Farm had $3 billion of catastrophe bond risk capital outstanding at this time, according to our sponsor leaderboard, which rises to a huge $4.5 billion with this new issuance.
However, the insurer has $450 million of cat bonds scheduled to mature this year, so that will fall to $4.05 billion around early July.
But for now, with $4.5 billion of catastrophe bonds outstanding, State Farm is at the top of the Artemis cat bond sponsor leaderboard by quite a margin.
Just like all of State Farm’s catastrophe bonds under the Merna Re named structures in recent years, we understand that Aon Securities has structured the deal and acted as bookrunner for the offering again.
It’s good to see State Farm returning again in 2026 and securing a very meaningful amount of reinsurance limit from the catastrophe bond market.
If and when any further details emerge on this large catastrophe bond sponsorship from State Farm we will update you.
We’ve added this new $1.5 billion Merna Re Enterprise Ltd. (Series 2026-1) catastrophe bond issuance to the Artemis Deal Directory, where you can read about and analyse details of almost every cat bond transaction.
