Palomar Insurance Holdings has now successfully priced what will be the largest catastrophe bond it has sponsored yet, as the company secured its upsized target for $525 million of California earthquake reinsurance limit from the new cat bond issuance, Artemis understands.Palomar returned to the catastrophe bond market earlier this month, with an initial target to secure $425 million in reinsurance from this Torrey Pines Re 2025-1 catastrophe bond.As we said at the time, the initial $425 million size target would make this new cat bond the largest sponsored by Palomar Insurance Holdings to-date Last year, Palomar sponsored what was its largest catastrophe bond with the $420 million .As we then reported in an update last week, Palomar raised the target size for the issuance to as much as $525 million, while at the same time the price guidance was reduced.

Now, we’ve learned that the company has secured the upsized target for $525 million of fully-collaterlized California earthquake reinsurance from its latest cat bond sponsorship, representing a roughly 24% upsizing over the marketing of the deal..As a result, this new Torrey Pines Re 2025-1 catastrophe bond will provide Palomar with a confirmed $525 million in capital markets backed reinsurance protection against California earthquake losses, on an indemnity and per-occurrence basis across a three year term, to the start of June 2028.

What was at first a $125 million Series 2025-1 Class A tranche of notes have now been priced to provide $150 million in protection, we are told.The Class A notes have an initial expected loss of 1.22%, were first offered to investors with price guidance of 3.5% to 4% and we understand have now been priced at the mid-point of that range for a spread to be paid to investors of 3.75%.What was initially a $175 million Series 2025-1 Class B tranche of notes have been upsized to provide $200 million in coverage for Palomar.

The Class B notes come with an initial expected loss of 1.84%, were initially offered to investors with price guidance in a range from 4.5% to 5%, but have now been priced for a spread at the low-end of 4.5%.What was originally a $125 million Series 2025-1 Class C tranche of notes have been upsized to provide $175 million in coverage for Palomar, sources explained.The riskier of the three layers, these Class C notes come with an initial expected loss of 3.25%, were first offered to investors with price guidance in a range from 6.5% to 7% and we now understand have also been priced at the low-end of the range for a spread of 6.5%.

As a result, Palomar has successfully deepened the participation of catastrophe bond investors in its reinsurance tower with this new deal.The insurer’s $275 million matures this year, so this new $525 million issuance will replace that and more, growing the role of the capital markets in Palomar’s reinsurance arrangements.You can read all about this catastrophe bond and every deal issued since 1996 in the Artemis Deal Directory..

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