State Farm, Florida Citizens and Texas Windstorm Insurance Assocation (Twia) are all positioning to offer mega cat bonds to the market, sized at $1.2bn-$1.5bn, $1bn and $500mn-$600mn respectively, Insurance Insider ILS understands.
The trend for super-sized cat bonds emerged last spring with State Farm targeting a bond of ~$1.2bn, in a deal that ultimately closed at $1bn.
Now the sponsor is understood to be preparing for an issuance of ~$1.2bn up to $1.4bn/$1.5bn, as it again seeks to tap capital markets investors for reinsurance coverage.
The nationwide US carrier has taken cat losses this year of around $7.6bn from the southern California wildfires, through its CA subsidiary State Farm General.
The new mega bond deal will include replacing around $500mn of its cat bond notes that are scheduled to mature in Q2. The carrier has placed Merna Re cat bonds on a semi-private basis in the past.
Florida Citizens is understood to be mulling a $1bn bond issuance, but will require board approval before moving ahead, sources noted.
The state-backed carrier is targeting $4.45bn of protection for 2025, up 25% on last year, with the ultimate balance of traditional reinsurance and capital markets coverage likely to come down to pricing.
Citizens has a $200mn Everglades Re II note maturing in May. It placed $1.1bn of Everglades Re notes as part of the season of bumper issuances in Q2 last year.
Meanwhile in Texas, state carrier Twia is preparing a new Alamo Re offering of $500mn-$600mn, according to sources. This will partly replace $200mn of Alamo Re notes due to expire in June.
Twia is targeting $1.73bn of reinsurance and cat bond cover for 2025-2026.
Q2 is typically the most active month for cat bond issuance as sponsors seek to secure coverage for the upcoming Atlantic hurricane season.
A record $8.2bn of cat bond limit was placed in Q2 2024, up from $6.9bn in Q2 2023 and $4.8bn in Q2 2022, according to data tracked by this publication.
The potential Q2 volumes could help push total cat bond issuance to a new high this year, ahead of 2024’s record issuance of $17.2bn.
State Farm, Florida Citizens and Twia were contacted for comment.
For more on cat bond issuance, visit the Insurance Insider ILS cat bond market activity tracker.