TWIA narrows Alamo Re 2026-1 cat bond size to $725m – $750m, targets low-end pricing

The Texas Windstorm Insurance Association (TWIA) has now narrowed the targeted size for its new Alamo Re Ltd. (Series 2026-1) catastrophe bond sponsorship, with $725 million to $750 million of capital markets backed reinsurance limit now sought while price guidance is now looking set to be at or near the lowest-end, Artemis can report.

The Texas Windstorm Insurance Association (TWIA), the residual market property insurer for the State of Texas, came back to the cat bond market in April with an initial target to secure $450 million of limit from this Alamo Re 2026-1 issuance.

As we later reported, TWIA’s ambitions for issuance size had increased for all three tranches of notes on offer, while the price guidance was lowered in each case as well and the deal was then seeking between $600 million and as much as $750 million of reinsurance limit for TWIA.

Now, sources have told us that the target size has not risen, but the range has narrowed considerably, with TWIA now aiming to secure between $725 million and $750 million of reinsurance from its latest cat bond sponsorship.

At the same time, we’re told that price guidance has either now been fixed at, or narrowed at, the low-ends of the reduced ranges, as TWIA seeks best execution for this offering of catastrophe-linked securities.

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

This Alamo Re 2026-1 cat bond is set to 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, were later targeted at between $300 million and $350 million in size, but we’re now told the target for this tranche has been fixed at $300 million.

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%, which was later lowered to 5.25% to 6%, but we now understand this has been updated at the single figure of 5.25%.

What was also initially a $200 million Class B tranche of notes were later targeted to be from $225 million to $275 million in size, but we’re now told are also targeted at $300 million in size after a second update.

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 was lowered to 7.25% to 7.75%, but we’re now told has narrowed again to between 7.25% and 7.5%.

What was a $50 million Class C tranche of notes were later targeted at between $75 million and $125 million, but have now increased again to between $125 million and $150 million for size.

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%, which was first reduced to from 10.5% to 11% and we’re now told has been updated again at the single figure of 10.5%.

It seems TWIA is optimising for size and price across the three tranches of notes, with its second update seemingly seeing its appetite shift a little to secure more reinsurance limit from the riskier tranches of notes.

This may be as TWIA and its reinsurance brokers get indications from the capital markets versus traditional, perhaps showing a glimpse of where risk appetites are strongest and pricing most accommodating to cedent needs.

With between $725 million and $750 million of reinsurance now sought from this latest TWIA sponsored catastrophe bond, it means the insurer of last resort may around $350 million to $375 million of traditional reinsurance protection this year.

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.

We understand that early cat bond redemptions will include $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 as much as $1.95 billion of its roughly $2.3 billion risk transfer and reinsurance need supplied by the cat bond market in 2026.

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.