State Farm Insurance has begun discussions with J. P.Morgan on the renewal of a 364-day, $2.16 billion credit line due in December, and if the facility is not renewed the company would seek an alternative form of protection. Dick Luedke, public affairs specialist for State Farm, declined to specify whether that would comprise reinsurance, catastrophe bonds or other alternatives. The existing revolver has a facility fee of four basis points and any borrowings would carry a rate of LIBOR plus 13.5 basis points. Currently no balance is outstanding on the facility, Luedke said.
Luedke declined comment on what would trigger the company to seek alternative catastrophe protection or whether the credit would go out to bid if an agreement could not be reached with J.P. Morgan. Luedke also declined naming the other banks on the syndicate. Calls to J.P. Morgan were not returned by press time.