TWIA’s new Alamo Re 2020 cat bond doubles in size to $400m

The Texas Windstorm Insurance Association’s (TWIA) new Alamo Re II Pte. Ltd. (Series 2020-1) catastrophe bond issuance has successfully been doubled in size thanks to strong demand from investors and will now provide the residual market property insurer $400 million of reinsurance protection.

TWIA returned to the catastrophe bond market last month, with a new issuance for 2020 that is the insurer’s first cat bond transaction to use Singapore as its domicile.

The Alamo Re II cat bond transaction was launched targeting $200 million of reinsurance protection for TWIA, but a positive response from the cat bond investor community saw the target lift to between $300 million and $400 million.

Now, we understand from our sources, that TWIA has successfully secured the top-end of the revised target, with the Alamo Re II 2020 cat bond issuance doubling in size to reach $400 million.

So, now the Alamo Re II 2020-1 cat bond will provide TWIA with a $400 million three-year source of reinsurance protection against losses from Texas named storms and severe thunderstorms, on an indemnity trigger and annual aggregate basis.

It will sit 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, attaching at $2.1 billion of losses and running up to an exhaustion of the layer at $4.2 billion, as documented in the layer chart we published recently.

TWIA had been looking to secure at least $200 million of new catastrophe bond coverage and up to $1.3 billion of traditional reinsurance at this renewal, to sit alongside $600 million of remaining cat bonds from previous years and above $2.1 billion of funding from the Catastrophe Reserve Trust Fund, member assessments and pre or post-event debt funding sources.

With the new catastrophe bond doubled in size to $400 million, it means TWIA will only need to secure $1.1 billion of traditional reinsurance, to reach its $4.2 billion funding goal for the 2020 hurricane season.

The pricing of the new catastrophe bond was fixed at the top-end of initial guidance, at 5.75%, offering a raised coupon and multiple of expected loss to investors, following the trend of every other recently issued cat bond transaction.

We understand that TWIA’s new Alamo Re II Pte. Ltd. (Series 2020-1) catastrophe bond issuance will settle in just over one week’s time.

You can read details on every catastrophe bond issued to-date in our extensive Artemis Deal Directory.