TWIA Board adopts lower PML funding requirement for 2026 after legislative changes

Following legislative reforms enacted in 2025 that lowered the Texas Windstorm Insurance Association’s required catastrophe funding level from a 1-in-100-year to a 1-in-50-year probable maximum loss (PML), TWIA’s board has adopted a $4.3 billion 1-in-50 PML for the 2026 storm season.

A 1-in-50 PML represents a loss level with a 2% annual probability of exceedance and serves as the statutory benchmark for the minimum total available funding, including reinsurance and other risk-transfer mechanisms, that TWIA must maintain for the upcoming storm season.

Readers may recall that Texas House Bill 3689, passed in the summer last year, stated, “The association shall maintain total available loss funding in an amount not less than the probable maximum loss for the association for a catastrophe year with a probability of one in 50.

“If necessary, the required funding level shall be achieved through the purchase of reinsurance or the use of alternative financing mechanisms, or both, to operate in addition to or in concert with the trust fund, public securities, financial instruments, and assessments authorised by this chapter.”

Shortly after the bill’s passage, TWIA indicated that its reinsurance requirement for the 2026 wind season could decline materially under the new 1-in-50 funding standard.

That expectation now appears to be materialising.

Following a recent board meeting, TWIA voted to pursue approximately $2.28 billion of reinsurance protection for the 2026 hurricane season, alongside roughly $2 billion in statutory funding sources.

The programme is expected to comprise both newly placed coverage and existing multi-year catastrophe bonds, secured on what TWIA described as the most favourable terms achievable in the market.

Taken together, this funding structure supports a 1-in-50 PML requirement of $4.3 billion for 2026, down from the prior 1-in-100-year mandated level of $6.227 billion a year earlier.

For more details on TWIA’s multi-year catastrophe bonds, see the leaderboard from our sister publication, Artemis, which lists all outstanding catastrophe bonds and insurance-linked securities (ILS) tracked in the Artemis Catastrophe Bond & Insurance-Linked Securities Deal Directory, broken down by sponsor and cedent.