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TWIA secures $2.1bn of private market reinsurance & cat bonds for 2019

7th June 2019 - Author: Luke Gallin

The Texas Windstorm Insurance Association (TWIA) has completed its 2019 reinsurance program, securing $2.1 billion of private market reinsurance and catastrophe bond protection for the 2019 Atlantic hurricane season.

TWIA LogoTWIA’s 2019 reinsurance program is effective June 1st, 2019 and provides total aggregate funding of $4.2 billion. 50% of this is from the private reinsurance market and also the insurance-linked securities (ILS) market via the issuance of catastrophe bond transactions, with the other $2.1 billion of funding coming from other sources.

This includes funds deposited in the Catastrophe Reserve Trust Fund (CRT) of around $118 million and $2 billion of alternating layers of debt securities and member company assessments.

The 2019 reinsurance program includes $400 million of Alamo Re (Series 2017-1) catastrophe bonds, $400 million of Alamo Re Ltd. (Series 2018-1) catastrophe bonds, and also $200 million from the recently issued Alamo Re Ltd. (Series 2019-1) catastrophe bond transaction.

This, combined with $1.1 billion of traditional reinsurance coverage, which has a one-year term while the catastrophe bonds provide multi-year protection, takes TWIA’s private, pro-rata reinsurance market coverage to $2.1 billion in excess of $2.1 billion.

“TWIA is pleased by the success of our reinsurance placement for the 2019 hurricane season. Our strong relationships in both the ILS and traditional reinsurance markets, bolstered by our record of responsible financial stewardship, allows us, once again, to have sufficient funding to pay catastrophic losses, so we can deliver on our promise to our policyholders,” said John Polak, General Manager, TWIA.

TWIA is pleased with the successful completion of its 2019 – 2020 reinsurance program, noting that its traditional aggregate coverage means that losses from multiple events are covered under the same program, while its catastrophe bond deals satisfy its risk management objectives and at the same time provide a stable source of funding at comparable pricing levels.

Guy Carpenter acted as reinsurance broker for the renewal of TWIA’s 2019 program, while GC Securities acted on the recent catastrophe bond issuance for Alamo Re 2019.

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