The Texas Windstorm Insurance Association (TWIA) has now successfully priced its new Alamo Re Ltd. (Series 2026-1) catastrophe bond sponsorship, securing the upper-end target for $750 million of capital markets backed reinsurance limit from this issuance, Artemis can report.
The Texas Windstorm Insurance Association (TWIA), the residual market property insurer for the State of Texas, returned to the cat bond market in April with an initial target to secure $450 million of limit from this Alamo Re 2026-1 issuance.
TWIA’s ambitions for issuance size then increased with the deal updated to target between $600 million and as much as $750 million of reinsurance limit, while price guidance fell.
In our second update, we reported that the target size narrowed to between $725 million and $750 million of reinsurance, while the price guidance was either fixed at, or narrowed at, the low-ends of the reduced ranges.
Now, we understand TWIA successfully secured the upper-end target of $750 million of reinsurance, while pricing all three tranches of notes at the lowest-end.
TWIA has been directly sponsoring catastrophe bonds since 2014 with this set to be the twelfth from the insurer.
Before going into the final details on these Alamo Re Series 2026-1 catastrophe bond notes, here’s what we now know about TWIA’s reinsurance tower for 2026 so far.
In order to meet its new 1-in-50 year probable maximum loss funding level for 2026 TWIA only requires around $2.28 billion of risk transfer in total this year.
TWIA currently has total cat bond risk transfer of $2.45 billion, according to the Artemis cat bond sponsor leaderboard.
Out of its outstanding Alamo Re cat bonds there are $900 million of notes scheduled to mature this June, so those won’t be available for the coming hurricane season for TWIA.
We understand that early cat bond redemptions TWIA is set to make are expected to include $1 billion from the Class A and B notes of the Alamo Re Ltd. (Series 2024-1) transaction, as well as the $250 million Class A tranche issued under the Bluebonnet Re Ltd. (Series 2025-1) deal.
That leaves only $300 million of reinsurance from the outstanding Bluebonnet Re Class B and C cat bond notes still available for the 2026 storm season.
So, with this new Alamo Re 2026-1 issuance now confirmed to have upsized to the maximum target of $750 million, TWIA looks set to have $1.05 billion of its roughly $2.28 billion of risk transfer and reinsurance need supplied by the cat bond market in 2026.
Meaning, the insurer will require a further roughly $1.23 billion of reinsurance, from either traditional or capital markets sources to fill out its risk transfer needs this year and cover that roughly $2.28 billion part of its funding tower for 2026.
At this time it remains uncertain whether this will all be standard reinsurance, from traditional and perhaps also some collateralized or fronted capital market sources, or whether TWIA could even opt to sponsor an additional cat bond issuance to fill some of that $1.23 billion remainder. Given the attractive pricing it has now secured in the cat bond market an additional sponsorship can’t be ruled out, although time is running short before wind season. It’s worth noting though, that TWIA has settled new cat bonds in June before, so it’s not impossible.
Now, back to the final pricing details of the new Alamo Re Series 2026-1 catastrophe bond sponsorship by TWIA.
This Alamo Re 2026-1 cat bond is now confirmed to provide TWIA with a $750 million source of reinsurance protection against losses from Texas named storms and severe thunderstorms, on an indemnity trigger and annual aggregate basis, with one tranche of notes having a three-year term, while the other two will run for only two-years.
What was at first a $200 million Class A tranche of Alamo Re Series 2026-1 notes, were later targeted at between $300 million and $350 million in size, but were eventually fixed to provide $300 million of reinsurance.
The Class A notes are the ones with the three year term and have an initial base expected loss of 2.79%. These notes were first offered with spread price guidance of 6% to 7%, which was later lowered to 5.25% to 6%, but this was updated at 5.25%, so the lowest-end, which is where the initial risk interest spread has now been priced.
What was also at first a $200 million Class B tranche of notes were later targeted to be from $225 million to $275 million in size, but the target rose to $300 million in size after a second update and this is how much reinsurance TWIA has now secured from this layer.
The Class B notes will have a two year term, with an initial base expected loss of 3.63%. These notes were offered with spread price guidance of 7.75% to 8.75%, which was lowered to 7.25% to 7.75%, then narrowed again to between 7.25% and 7.5% and we’re told the risk interest spread priced at 7.25%, so again the lowest-end.
What was initially a $50 million Class C tranche of notes were later targeted at between $75 million and $125 million, which then increased again to between $125 million and $150 million for size, with TWIA finally securing the upper $150 million of reinsurance from these notes.
The Class C notes are also a two year cover and the riskiest layer, with an initial base expected loss of 5.01%. They were first being offered with spread price guidance of 11% to 12%, which was first reduced to from 10.5% to 11%, but were eventually priced to pay an initial risk interest spread of 10.5%, again at the low-end.
So this has been a very successful visit to the catastrophe bond market for TWIA, securing more than the initially targeted reinsurance at well below price guidance.
It’s going to be interesting to see how the $2.28 billion risk transfer tower is finalised and whether any additional capital market sources could be introduced, or whether TWIA goes into the hurricane season with the $1.05 billion of catastrophe bond coverage it now looks assured to have (if all the redemptions occur as we’ve heard).
Read all about this new Alamo Re Ltd. (Series 2026-1) catastrophe bond for the Texas Windstorm Insurance Association and every other cat bond transaction in the Artemis Deal Directory.
