The Texas Windstorm Insurance Association (TWIA) has secured $1.4 billion of cover for its 2018 reinsurance programme via $1.0 billion in traditional reinsurance and the issuance of a $400 million, 3-year catastrophe bond.
TWIA’s 2018 reinsurance program runs from June 1, 2018 to May 31, 2019, and provides $4.6 billion in total aggregate funding sources, an amount well in excess of its statutory minimum funding.
TWIA says its reinsurance placement was well received by the market, and that its CAT bond, issued by Alamo Re Ltd., was also well received with pricing at 3.25%.
TWIA once again used Guy Carpenter as the broker for its traditional reinsurance program, while GC securities served as its Underwriter for the catastrophe bond portion.
The Association attributed the success to its efficient handling of more than 75,000 claims from Hurricane Harvey last year, as well as to several years of ongoing operational and financial improvements.
The 2018 program also includes CAT funding sources provided by statute, including alternating layers representing the issuance of debt securities totalling $1 billion, and member insurer assessment totalling $1 billion.
Additionally, the $4.6 billion of aggregate funding accounts for two $400 million catastrophes bonds issued in 2017 and 2015, and for a $400 million ‘Second Season’ reinsurance contract purchase in 2017 and effective June 1, 2018.
This reflects TWIA’s strategy of using catastrophe bonds with staggered maturity dates in order to reduce its exposure to market fluctuations.
John Polak, General Manager of TWIA, commented: “TWIA is pleased to have strong relationships among traditional reinsurers as well as investment managers in the expanding ILS market. Our ability to place traditional reinsurance and issue Cat bonds to secure sufficient funding for catastrophic losses ensures we can be there for our policyholders when they need us most.”
