TWIA lifts Alamo Re 2026-1 cat bond target size to between $600m and $750m

The Texas Windstorm Insurance Association (TWIA) has raised the target size of its new Alamo Re Ltd. (Series 2026-1) catastrophe bond, with now between $600 million and $750 million of capital markets backed reinsurance limit being sought, we have learned from sources.

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 new deal.

Now, the size ambitions have increased for all three tranches of notes on offer, while the price guidance has been lowered in each case as well, we are told.

TWIA has been directly sponsoring catastrophe bonds since 2014 with this set to be the twelfth from the insurer.

This latest Alamo Re Series 2026-1 catastrophe bond now targets between $600 million and as much as $750 million of reinsurance limit for TWIA.

As we’d reported before, in order to meet its 1-in-50 year probable maximum loss funding level in 2026 TWIA only requires around $2.28 billion of risk transfer in total this year, so this potential upsizing now suggests cat bonds will remain a significant component of that.

TWIA currently has total cat bond risk transfer of $2.45 billion at this time according to the Artemis cat bond sponsor leaderboard.

But, we understand the insurer is planning to redeem a number of cat bond tranches early, given they do not fit the shape of its now lower risk transfer tower as well.

We understand that includes $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.

Which means, should this new Alamo Re 2026-1 issuance upsize to the maximum target of $750 million, TWIA could have around $1.95 billion of its roughly $2.3 billion risk transfer and reinsurance need supplied by the cat bond market in 2026. We won’t know how this all pans out and what early redemptions are made for a few more weeks, we suspect.

This Alamo Re 2026-1 cat bond will provide TWIA with 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 initially a $200 million Class A tranche of Alamo Re Series 2026-1 notes are now targeted at between $300 million and $350 million in size.

The Class A notes have the three year term, with an initial base expected loss of 2.79%. These notes were first offered with spread price guidance of 6% to 7%, but that has now been lowered to 5.25% to 6%, we understand.

What was also initially a $200 million Class B tranche of notes are now targeted to be from $225 million to $275 million in size.

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 has now also been lowered to a revised range of 7.25% to 7.75%.

What was a $50 million Class C tranche of notes are now targeted at between $75 million and $125 million, we understand.

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%, but that has also been reduced to now from 10.5% to 11%.

As a result, TWIA looks likely to maintain catastrophe bonds position as the largest source of reinsurance protection in its risk transfer tower in 2026, even after the early redemptions that are now anticipated as possible.

The targeted upsizing shows TWIA recognising the value available in the cat bond market, to lock-in multi-year protection at attractive pricing, with the spreads now targeted at the low-ends of initial guidance or below.

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.