Alamo Re Ltd. (Series 2026-1)

The Texas Windstorm Insurance Association (TWIA), the residual market property insurer for the State of Texas, is back in the catastrophe bond market to sponsor what will be its twelfth catastrophe bond issuance, as it looks to source more capital markets backed multi-year reinsurance protection.

For 2026, the Texas Windstorm Insurance Association (TWIA) is using its Alamo Re Ltd. Bermuda based special purpose insurer (SPI) again, having last year used a different issuing entity to sponsor the Bluebonnet Re Ltd. (Series 2025-1) deal.

For 2026, the residual market insurer for the State of Texas has reverted back to utilising its Alamo Re Ltd. special purpose insurer (SPI) which is also based in Bermuda for its new cat bond sponsorship, we are told.

Alamo Re Ltd. is targeting issuance of three tranches of Series 2026-1 notes that will be sold to investors and the proceeds be used to support the collateral needs of the reinsurance agreements to protect TWIA.

At least $450 million in reinsurance protection is being sought across the three tranches of Series 2026-1 notes that Alamo Re will issue.

All three tranches of notes will provide TWIA with reinsurance against Texas named storms and severe thunderstorms, on an indemnity trigger and annual aggregate basis, the same as its previous cat bonds under the Alamo Re vehicle have provided the insurer.

One tranche of notes will have a three-year term, while the other two only two-years, which likely reflects TWIA seeking greater optionality in future as its risk transfer needs evolve under the new legislative mandate for 1-in-50 year coverage.

Each will feature annual aggregate risk periods, running to maturity in June 2028 for the two year tranches and June 2029 for the three year tranche, while we understand there is an aggregate event deductible of $50 million in force for loss events to qualify.

A $200 million Class A tranche of Alamo Re Series 2026-1 notes would cover TWIA for losses between an attachment of $3.625 billion and exhaustion of $4.3051 billion over a three year term, giving the notes an initial attachment probability of 3.08% and an initial base expected loss of 2.79%. These notes are being offered with spread price guidance of 6% to 7%, sources said.

An also $200 million Class B tranche of notes will cover TWIA for losses from an attachment of $2.625 billion to exhaustion at $3.625 billion over a two year term, giving the notes an initial attachment probability of 4.49% and an initial base expected loss of 3.63%. These notes are being offered with spread price guidance of 7.75% to 8.75%, we’re told.

The final $50 million Class C tranche of notes will cover TWIA for losses from an attachment of $2.025 billion to exhaustion at $2.625 billion, giving the notes an initial attachment probability of 5.65% and an initial base expected loss of 5.01%, so are the riskiest and lowest down layer. These notes are being offered with spread price guidance of 11% to 12%, we understand.