The Texas Windstorm Insurance Association’s (TWIA) target for its third catastrophe bond transaction, Alamo Re Ltd. (Series 2017-1), has been lifted while the deal is being marketed, with the insurer now seeking up to $400 million of reinsurance coverage and at keener pricing, as the guidance has now been lowered.
The Alamo Re 2017-1 cat bond sees TWIA looking for a capital markets source of fully-collateralized reinsurance protection against losses from named storms and severe thunderstorms in the state of Texas on an annual aggregate and indemnity trigger basis.
When the cat bond was launched, Alamo Re Ltd. was targeting the issuance of a single tranche of Series 2017-1 Class A notes, sized at $250 million.
We now understand from sources that the target size for this issuance has been increased, with TWIA now looking to secure somewhere from $350 million to as much as $400 million of reinsurance protection through the issuance of this Alamo Re 2017-1 cat bond.
At the same time as the target size has been lifted, the price guidance on the notes has dropped, we’re told.
The notes were originally offered to cat bond investors with coupon price guidance in a range from 3.9% to 4.4%.
We understand that this pricing has been lowered and narrowed, with the Alamo Re 2017-1 cat bond notes now offered with coupon guidance of 3.75% to 3.9%, so below the initially marketed range.
Given the new Alamo Re 2017-1 cat bond will sit directly beneath the $700m of Alamo Re 2015-1 notes in TWIA’s reinsurance tower, so this new deal is riskier, it’s interesting to note that the 2015-1 Class A notes which were issued in May that year and will sit directly on top of the 2017-1 notes, priced at 5.9%.
That clearly shows the scale of the catastrophe bond market price decline in just the last two years.
The Alamo Re Ltd. (Series 2017-1) catastrophe bond is scheduled for completion during May, in advance of TWIA’s June 1st reinsurance renewal. We’ll continue to update you as more information becomes available and you can read about this and every other cat bond in the Artemis Deal Directory.
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