Gallagher Re looks set to win a major new reinsurance broking client thanks to its acquisition of Willis Re, as the Texas Windstorm Insurance Association (TWIA’s) Actuarial & Underwriting Committee continues to make the recommendation for a change.
As we explained just over one month ago, TWIA’s Committee had voted to recommend a change to the Association’s reinsurance broker to Willis Re, a move which also has ramifications for the issuance of TWIA’s catastrophe bonds.
In recent years, Guy Carpenter has been TWIA’s reinsurance broker of choice, while the brokers’ capital markets unit, GC Securities, has provided both structuring and bookrunning services for TWIA’s successful Alamo Re catastrophe bond program issuances.
At a meeting yesterday, TWIA’s Actuarial & Underwriting Committee reviewed best and final offers from the broker beauty parade and again recommended the switch of reinsurance broker to Willis Re, affirmed that decision, which will now go before the TWIA Board today.
It’s a final approval as the TWIA Board will only be delivered the single recommendation for the change, making it extremely unlikely the Board would go against its expert Committee on this issue.
Of course, with AJG now having completed its acquisition of Willis Re, the winning reinsurance broker will actually be Gallagher Re.
On the catastrophe bond side, that likely means the Willis Re Securities unit, which we expect will be rebranded as Gallagher Re Securities in time, will likely take on the honours of dealing with TWIA’s next catastrophe bond issuance.
We’d expect TWIA to come back to the catastrophe bond market in the first-half of 2022.
The Association may look to harden up its reinsurance arrangements in 2022 as well, given the effects of recent loss years.
TWIA has accessed the catastrophe bond market for reinsurance every year since 2014 with an Alamo Re issuance, all of which were brought to market with the assistance of GC Securities working alongside reinsurance brokers at Guy Carpenter.
The overall TWIA reinsurance program reached $1.93 billion in size in 2021, having been renewed in June and now consists of 57% catastrophe bonds, demonstrating the importance of the insurance-linked securities (ILS) market to the residual market insurer.
This will be seen as an encouraging win for the Gallagher Re team and an opportunity to bring together their reinsurance and newly acquired capital market expertise on a significant renewal placement in 2022.
Update: TWIA’s Board affirmed the decision to change reinsurance broker, voting to select Gallagher Re.