Farmers Insurance Announces Transition to Term SOFR for Notes
Farmers Insurance Exchange Makes Key Financial Transition
Farmers Insurance Exchange has announced significant changes concerning their financial instruments. Recently, the company has transitioned the resetting interest rate for its Surplus Notes to align with Term SOFR, reflecting adjustments in the interest landscape.
Background on Farmers Insurance's Surplus Notes
In 2017, Farmers Insurance Exchange issued $400 million in the form of 4.747% Surplus Notes, intended to mature in 2057. These notes were established under a Fiscal Agency Agreement with The Bank of New York Mellon Trust Company, which serves as the Fiscal Agent. This agreement gives Farmers Exchange the potential to call or fully pay off these notes a decade earlier, in 2037.
Significance of the Transition to Term SOFR
The 2057 Notes are currently set to transition from a fixed coupon rate to a floating interest rate, based on LIBOR. However, due to the cessation of LIBOR availability, Farmers Exchange has opted to utilize a Term SOFR-based floating rate instead. This change was necessitated by financial legislation enacted in 2022, which favors the use of the Term SOFR rate over LIBOR.
Implementation of Floating Rate Structure
On a recent date, upon request from certain noteholders, an amendment was made to formalize this transition. The new interest structure for the 2057 Notes will now have a floor interest rate of 4.747% per annum and will float above this threshold based on the Term SOFR rate. This amendment not only streamlines the interest rate strategy but also aligns it with changes already made for other Surplus Notes issued by Farmers Exchange.
Information About the 2057 Notes
This adjustment applies exclusively to the 2057 Notes and enhances their flexibility in a changing economic environment. Farmers Insurance Exchange continually seeks ways to adapt and optimize its financial instruments amidst evolving circumstances.
About Farmers Insurance
Farmers Insurance comprises a group of insurers providing diverse insurance products for automobiles, residences, small enterprises, and various financial services. The commitment to delivering valuable products is a hallmark of the organization. Investors and customers can keep up with Farmers Insurance by visiting their website or engaging with them through popular social media platforms.
Contact Information
For further inquiries, interested parties can reach Farmers Insurance at 818-965-0007.
Frequently Asked Questions
What financial transition has Farmers Insurance announced?
Farmers Insurance is transitioning its Surplus Notes to a Term SOFR-based floating rate from LIBOR due to legislative changes.
When were the 2057 Notes issued?
The 2057 Notes were originally issued in October 2017 with a coupon rate of 4.747%.
What is the significance of Term SOFR?
Term SOFR is used as a reliable benchmark for interest rates following the phase-out of LIBOR, reflecting current market conditions.
What does the amendment to the Fiscal Agency Agreement entail?
The amendment allows for a floating interest rate structure based on Term SOFR, enhancing financial flexibility for noteholders.
How can I find out more about Farmers Insurance?
More information about Farmers Insurance can be found on their official website and social media channels.
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