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The Texas Windstorm Insurance Association (TWIA) has completed its 2026 risk transfer programme, securing $2.28 billion in reinsurance coverage at a net cost almost $26 million under budget, with total funding for this year’s Atlantic hurricane season standing at $4.305 billion.
After the TWIA Board adopted a $4.3 billion 1-in-50 PML for the 2026 storm season in February, the April Board meeting confirmed that the residual insurer of last resort was working to secure $2.28 billion of reinsurance from the traditional market and the capital markets.
At that time, TWIA’s $750 million Alamo Re Ltd. (Series 2026-1) catastrophe bond had been priced ahead of closing, meaning the Association required $1.23 billion of fresh reinsurance to fulfil its risk transfer requirements for 2026.
The multi-year Alamo Re cat bond closed in May, and in the same month, TWIA’s reinsurance broker Gallagher Re confirmed that the remaining $1.23 billion of reinsurance required would come from the traditional market.
Ahead of its August Board meeting today, TWIA has confirmed the successful procurement of the $1.23 billion in traditional reinsurance, alongside the aforementioned $750 million in 2026 collateralised cat bond notes issued, and $300 million in continuing collateralised cat bond notes issued in 2025 from Bluebonnet Re.
So, that’s $2.28 billion of reinsurance protection for the 2026-2027 programme, which as you can see from the image below, sits above the $25 million projected CRTF balance, $1 billion in state financing arraignments, and $1 billion member assessments. The traditional reinsurance and cat bonds kick in at $2.025 billion of losses and LAE, extending to the $4.305 billion at the top of the tower.
TWIA states that gross ceded premiums associated with the $2.28 billion in reinsurance coverage amounted to $209.9 million, which is below the budgeted estimate of $237 million, reflecting a total rate-on-line of 9.21%, compared with 10.2% for the 2025-2026 programme.
Further, the net cost of the 2026-2027 programme, which is effective from June 1st, 2026, is $199.4 million after ceding commission, which is well under the budget of $225.2 million.
“The favorable budget variance is a result of the PML being set slightly below the initial estimate incorporated into the budget as well as a softening of the global reinsurance market, resulting in lower reinsurance costs overall,” explained TWIA.
Alongside its latest reinsurance renewal, TWIA has announced the completion of a request for proposals for its reinsurance broker, which was issued in late May, and received two responses, from Gallagher Re and Guy Carpenter, the reinsurance broking arm of Marsh.
This time, the Board asked TWIA staff to bring them a recommendation rather than letting the Board debate, and the document reveals that TWIA “recommends that the TWIA Board of Directors formally award the reinsurance broker role to Gallagher Re.”
The evaluation committee found that both brokers would be able to provide reinsurance brokerage services at an exceptional level, although, overall, the committee scored Gallagher Re slightly higher than the response from Guy Carpenter.
The post Net cost of TWIA’s finalised $2.28bn reinsurance programme well under budget appeared first on ReinsuranceNe.ws.
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