Swiss Re places $400 million cat bond for Farmers

Swiss Re Capital Markets has structured and placed a $400 million catastrophe bond for Farmers Insurance Group, marking the insurer’s second issuance and its largest to date. The Series 2025-1 transaction, issued through Bermuda-based Topanga Re Ltd., provides four years of per-occurrence protection on an indemnity basis against U.S. named storms, earthquakes, severe weather, and fire.

The deal includes two classes of principal-at-risk variable rate notes, with the $300 million Class A tranche featuring a drop-down mechanism that allows the notes to function as reinstatement coverage for Farmers’ traditional reinsurance program in certain third-event scenarios. The transaction also incorporates a four-year subrogation extension, a feature first introduced in Farmers’ inaugural cat bond in 2021, designed to improve investor recovery mechanics.

Swiss Re Capital Markets acted as joint structuring agent and joint bookrunner on the transaction, underscoring continued investor appetite for innovative ILS structures that complement traditional reinsurance programs.

“Swiss Re is proud to have advised Farmers in structuring and placing this innovative catastrophe bond, which demonstrates how the ILS market can act as a complement to traditional reinsurance by providing top and sideways cover. Acceptance of this drop-down mechanic demonstrates investors’ increased sophistication and willingness to support clients like Farmers, allowing the ILS market to better align with traditional reinsurance.” – Jean-Louis Monnier, CEO of Swiss Re Capital Markets Corporation.