The Texas Windstorm Insurance Association (TWIA) looks set to secure the entirety of the $1.23 billion of fresh reinsurance it requires to meet its 1-in-50 year probable maximum loss from the traditional market, with Gallagher Re’s Allen Cashin confirming yesterday that the programme is now fully committed and will be signed in the next 24/48 hours, while the rate-on-line (ROL) is comparable to last year.
In February, we reported that after legislative reforms enacted in 2025 lowered TWIA’s required catastrophe funding level from a 1-in-100 year to a 1-in-50 PML, the Board adopted a $4.3 billion 1-in-50 PML for the 2026 storm season, with TWIA at the time voting to pursue approximately $2.28 billion of new reinsurance protection to fill out its risk transfer tower, alongside the $2 billion in statutory funding sources.
As we reported earlier this week, TWIA recently priced a $750 million Alamo Re Ltd. (Series 2026-1) catastrophe bond, and after upcoming cat bond maturities and early redemptions, the Association also has $300 million of cover from the Class B and C notes of its Bluebonnet Re Ltd. (Series 2025-1) deal still in-force, providing TWIA with $1.05 billion of risk transfer from the capital markets for the 2026 wind season.
Ahead of yesterday’s Board meeting, it was unclear whether TWIA would secure the additional $1.23 billion of reinsurance limit required to meet the $2.28 billion level from the traditional market or the cat bond space, particularly in light of favourable cat bond market conditions.
However, during TWIA’s Board meeting on May 19th, when the discussion focused on why TWIA decided not to secure more of its coverage from the cat bond space, it was noted that the Association needs to maintain a balance between market sources of risk capital, suggesting the remaining reinsurance coverage has all been secured from the traditional market.
Cashin, Head of Programs, North America for Gallagher Re, TWIA’s reinsurance broker, commented on the 2026 placement at yesterday’s Board meeting.
“It is our fifth year placing the reinsurance, so we’re very proud and thankful to represent you guys in the reinsurance market. The programme is fully committed and will be signed in the next 24/48 hours, with the direction of staff. All the coverages met the requirements of the board, as does the financial security of the reinsurance markets.
“We did place $750 million of cat bonds this year, as well as the $300 million that rolls over from last year and all of this was done under the budget that was discussed and approved at the last board meeting.
“So, I want to thank my team, staff, legal counsel. It is a big lift to do this programme, a lot of time, calls and emails invested in this. So, thank you for the opportunity, and a great outcome for Windstorm and its members,” said Cashin.
During the meeting, Cashin also revealed that the 2026 risk transfer and reinsurance programme cost just under $212 million, which equates to a gross rate-on-line of 10%. This is comparable to the 2025 programme rate-on-line, but it’s worth highlighting that TWIA purchased a lot more reinsurance last year as it was mandated to buy to the 1-in-100 year PML level.
In terms of the reinsurance market environment this year, Cashin described it as “much more favourable.”
He continued: “It’s been a difficult couple years for reinsurance buyers, for sure. I think what the team and the staff did really well this year is create an auction-like environment… “You’ve got the ILS capacity, which is mostly cat bond, you have the traditional reinsurers all over the world. What we did, and this is months of preparation, was set up those two markets to auction and compete for your business, directly on the same layer. So, you have cat bond investors, which are basically asset managers, pension funds over the world, competing directly with traditional reinsurance markets, and therefore it’s the optimal structure at the lowest price.”
At yesterday’s meeting, TWIA’s Board also approved a new $500 million line of credit as an additional liquidity buffer against major storms, which includes an option to extend the line by an additional $200 million if required.
