Swiss Re Insurance-Linked Fund Management

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Alamo Re Ltd. (Series 2019-1)

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Alamo Re Ltd. (Series 2019-1) – At a glance:

  • Issuer: Alamo Re Ltd. (Series 2019-1)
  • Cedent / sponsor: Texas Windstorm Insurance Association (TWIA)
  • Placement / structuring agent/s: GC Securities is sole structuring agent and bookrunner
  • Risk modelling / calculation agents etc: AIR Worldwide
  • Risks / perils covered: Texas named storms and severe thunderstorms
  • Size: $200m
  • Trigger type: Indemnity
  • Ratings: NR
  • Date of issue: May 2019

Alamo Re Ltd. (Series 2019-1) – Full details:

The Texas Windstorm Insurance Association (TWIA) has returned to secure more reinsurance protection from the capital markets with its fifth Alamo Re catastrophe bond transaction, a currently $200 million Texas named storm and severe thunderstorm deal.

With this latest cat bond, Alamo Re Ltd. will look to issue a single tranche of Series 2019-1 cat bond notes, sized at least $200 million, sources said.

The cat bond is again coming to market with the assistance of German reinsurer Hannover Re, which acts as the ceding reinsurer for TWIA’s cat bond deals.

TWIA will enter into a reinsurance agreement with Hannover Rück SE and then enter into a retrocession agreement with Alamo Re Ltd. to effect the transaction and retrieve the coverage.

The $200 million or greater of notes will provide TWIA ultimately with a three-year source of fully collateralized reinsurance, on an indemnity trigger and annual aggregate basis, against losses from Texas named storms and severe thunderstorms.

Qualifying events have to cause TWIA over $50 million of loss before they can start to erode the cat bond retention and attach from $2.1 billion of losses upwards.

As a result, the notes will have an initial expected loss of 1.8% and we’re told are offered to investors with a coupon guidance range of 4.25% to 4.75%.

Update 1:

The new Alamo Re 2019-1 catastrophe bond launched at $200 million in size, but so far we understand this hasn’t increased at this time.

There is still a chance that TWIA elects to upsize the cat bond, but with order books closed as of last night we’ll have to wait and see how large the cat bond became.

Pricing is one area we can give more certainty, as the Alamo Re 2019-1 catastrophe bond notes are set to have priced at the mid-point of initial guidance, we’re told.

The currently $200 million single tranche of Series 2019-1 cat bond notes issued by special purpose insurer Alamo Re Ltd., with an initial expected loss of 1.8%, were initially offered to investors with a coupon guidance range of 4.25% to 4.75%.

We now understand that the final guidance on pricing was for a coupon of 4.5%, so right on the mid-point.

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