Swiss Re Insurance-Linked Fund Management

Xactanalysis Insights and PCS

TWIA’s $200m Alamo Re II catastrophe bond launches to investors


The awaited new catastrophe bond issuance from the Texas Windstorm Insurance Association (TWIA) has now been launched to the cat bond investment community, with a $200 million target for the Alamo Re II Ltd. (Series 2020-1) transaction.

TWIA logoAs we’d explained recently, TWIA was always set to return to the catastrophe bond market this year with a new Alamo Re II Ltd. catastrophe bond issue, looking to cement the role of the capital markets within its reinsurance arrangements.

The deal has now launched to the catastrophe bond fund and investor community, our sources said, with the $200 million target still the ambition for the Alamo Re II cat bond transaction.

Last week we also explained that TWIA may look to upsize or downsize the catastrophe bond issue dependent on pricing, so the response from cat bond investors and how readily the book builds for this issue is likely to drive the final size of the deal, compared to a traditional reinsurance renewal purchase TWIA is also in the market for right now.

As expected, TWIA has registered a new special purpose insurer (SPI) for its latest catastrophe bond issuance, Alamo Re II Ltd.

Alamo Re II Ltd. will seek to issue a single $200 million tranche of Series 2020-1 Class A notes, which will be sold to investors and the proceeds used to collateralise the necessary reinsurance agreement to provide coverage.

We understand that the Alamo Re II 2020-1 cat bond will provide TWIA with a three-year source of reinsurance protection against losses from Texas named storms and severe thunderstorms.

Coverage will be on an indemnity trigger and annual aggregate basis, attaching at $2.1 billion and running alongside other coverages including previous cat bond issues ($400 million of Alamo Re Ltd. (Series 2018-1) cat bonds and $200 million of Alamo Re Ltd. (Series 2019-1) cat bonds) and traditional reinsurance up to an exhaustion of the layer at $4.2 billion, as documented in the layer chart we published last week.

As a result, we’re told the new Alamo Re II Series 2020-1 Class A notes will have an initial expected loss of 1.78% and that they are being marketed to cat bond investors with coupon price guidance in a range from 5.25% to 5.75%.

For comparison, last year’s Alamo Re 2019-1 cat bond had an initial expected loss of 1.8% and priced at 4.5%, meaning this new cat bond from TWIA is offering 17% better pricing even at the low-end of guidance, 22% better at the mid-point and 28% at the top-end of that guidance.

The increased pricing should help to secure cat bond fund investor support for the deal, but as mentioned the ultimate size of this cat bond issuance will depend on how that compares to traditional sources of reinsurance.

We’ll update you as this new Alamo Re II Ltd. (Series 2020-1) catastrophe bond transaction from TWIA comes to market and you can read all about this and every other cat bond ever issued in the Artemis Deal Directory.

Register today for ILS NYC 2023, our next insurance-linked securities (ILS) market conference. Held in New York City, February 10th, 2023.

Artemis London 2022 - Insurance-linked securities conference in London

Get a ticket soon to ensure you can attend. Secure your place at the event here!

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.