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State Farm Insurance posts

State Farm Closes First Cat Bond of Q2

Posted Apr 2nd 2010 12:40PM by Tom Johansmeyer (RSS feed)
Filed under: Other Issues

The first catastrophe bond of the quarter closed on opening day ... and it was a big one. State Farm's Merna Re II transaction was good for $350 million in risk capital, upsized from the earlier reported amount of $250 million. Though large, it doesn't compare to the previous Merna Re catastrophe bond, which set a record at $1.2 billion that remains to be beat.

Merna Re II was oversubscribed, but State Farm only wanted to place $350 million, Thomson Reuters reports (registration required). According to one investor who knew about the transaction, "The deal was oversubscribed at +365 basis points and after being upsized to $350 million." The investor added, "The initial price talk was 365 - 405 bp, but the deal got priced at 365 bp. However, Merna was a simple transaction and State Farm only wanted to place 350 million."

Continue reading State Farm Closes First Cat Bond of Q2

State Farm to settle $80 million in Katrina claims

Posted Jan 9th 2007 10:45AM by Brandon Barker (RSS feed)
Filed under: Other Issues, Good news, Law

State Farm -- the biggest home insurer in the U.S. -- will avoid an endless string of court battles as they settle on 639 lawsuits over damages sustained during 2005's Hurricane Katrina. Insurance lawyers briefed by the company say that State Farm would, under a tentative agreement, provide an average of $125,000 to homeowners, with payouts ranging from a minuscule $2,000 to a whopping $2 million.

But this deal, for some reason, is only for residents of Mississippi (one state at a time, people), with the holdup centering on flood damage not covered under the claims. Flooding during Katrina was especially severe.

Before vilifying State Farm, however, keep in mind that damages totaling $5.2 billion have already been paid out in Mississippi and damages of $10.3 billion in Louisiana.

B. Brandon Barker is the author of Operation EMU