State Farm secures $1.5bn reinsurance via Merna Re Enterprise 2026-1 catastrophe bond

What's the deal? State Farm has returned to the catastrophe bond market with a $1.5 billion issuance through Merna Re Enterprise Ltd. (Series 2026-1), making it one of the largest cat bond offerings ever. The deal comprises two $750 million tranches of notes sold to catastrophe bond fund investors, with proceeds collateralising multi-year reinsurance agreements for the US insurer. The notes mature in early July 2029, giving State Farm roughly three years of protection.

The deal was marketed privately on a closed-group, or club basis to selected investors — a strategy State Farm has favoured for years to build deeper relationships with key insurance-linked securities (ILS) investor and cat bond fund markets, while gathering important pricing indications for its broader reinsurance purchases.

This is the joint-third biggest visit ever to the cat bond market by any sponsor, after State Farm's own 2025 cat bonds ($1.55 billion) and Florida Citizens' $1.525 billion 2025 Everglades issuance.

With this new issuance, State Farm now has $4.5 billion of catastrophe bonds outstanding, placing it firmly at the top of the Artemis cat bond sponsor leaderboard. The insurer has $450 million of cat bonds scheduled to mature this year, which will reduce the total to approximately $4.05 billion around early July.

While full details on covered perils remain limited, the bonds are expected to be multi-peril focused given their size, clearly covering US catastrophe perils in line with State Farm's operations. They are expected to provide reinsurance on an indemnity trigger basis, consistent with all of State Farm's previous cat bonds.

Source: Artemis.bm