The latest catastrophe bond to be sponsored by the Texas Windstorm Insurance Association (TWIA), the $200 million Alamo Re Ltd. (Series 2019-1) transaction, is set to price at the mid-point of initial guidance, we’re told.
The Texas state residual market insurer returned for its fifth Alamo Re catastrophe bond transaction recently, which will be the fourth year in a row it has sponsored a cat bond to augment its reinsurance tower, having missed out 2016.
TWIA is looking to secure at least $2.1 billion of protection from the global reinsurance and insurance-linked securities (ILS) market for the 2019 hurricane season and already has $1.2 billion of in-force Alamo Re catastrophe bonds to assist with that.
But a $400 million slice of this, from the Alamo Re Ltd. (Series 2015-1) transaction, is set to mature in June 2019, leaving only $800 million of cat bond coverage in-force for the coming hurricane season.
The new Alamo Re 2019-1 catastrophe bond launched at $200 million in size, but so far we understand this hasn’t increased at this time.
There is still a chance that TWIA elects to upsize the cat bond, but with order books closed as of last night we’ll have to wait and see how large the cat bond became.
Pricing is one area we can give more certainty, as the Alamo Re 2019-1 catastrophe bond notes are set to have priced at the mid-point of initial guidance, we’re told.
The currently $200 million single tranche of Series 2019-1 cat bond notes issued by special purpose insurer Alamo Re Ltd., with an initial expected loss of 1.8%, were initially offered to investors with a coupon guidance range of 4.25% to 4.75%.
We now understand that the final guidance on pricing was for a coupon of 4.5%, so right on the mid-point.
The $200 million of notes issued will provide TWIA with a three-year source of fully collateralized reinsurance, on an indemnity trigger and annual aggregate basis, against certain qualifying losses from Texas named storms and severe thunderstorms.
It’s expected that this latest pricing will not change before the transaction issuance is completed.
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