TWIA raises Alamo Re 2023-1 cat bond target again, now up to $500m

The Texas Windstorm Insurance Association (TWIA) has raised its target for reinsurance from its new 144a Alamo Re Ltd. (Series 2023-1) catastrophe bond issuance, with now up to $500 million of cover sought, which would be a doubling of the initially targeted size.

At the same time, the spread pricing target has been lowered, with the residual market property insurer for the state of Texas now looking set to secure the coverage at a 12.5% to 15% reduction from the mid-point of initial guidance.

TWIA returned to the catastrophe bond market around the middle of March, with a dual-series offering of both 144a notes and Section 4(A)2 notes that were pitched as an exchange opportunity for investors in a previous Alamo cat bond deal.

But the insurer opted to only pursue the issuance of Alamo Re Series 2023-1 144a notes and lifted the target size from its initial $250 million, to between $350 million and $450 million, as we reported in an update last week.

At the same time, the initial price guidance range of 9.5% to 10.5% for the notes on offer was lowered and tightened to a new range of 8.75% to 9.5%.

Now, we’re told by sources, that TWIA’s target for this cat bond issuance has been raised again, with now between $450 million and $500 million of Alamo Re Series 2023-1 notes expected to be issued.

At the same time, the Series 2023-1 Class A notes, which have an initial base expected loss of 2.05%, are now being offered with price guidance that has been lowered again, with the latest range being from 8.5% to 8.75%.

At that new spread guidance, TWIA looks set to benefit from the price dropping between 12.5% and 15% for its latest cat bond issuance, while the size of the issuance could now double to $500 million.

That will be a strong result for TWIA in the cat bond market and more than replace the $400 million Alamo cat bond that matures this year.

This larger than expected cat bond will also take some pressure off TWIA’s large reinsurance renewal needs this year, while there’s also now a chance that the fact pricing is proving more attractive than expected could also entice the insurer back, if a second cat bond could be secured before the wind season.

Read all about this new Alamo Re Ltd. (Series 2023-1) catastrophe bond from the Texas Windstorm Insurance Association and every other cat bond transaction in the Artemis Deal Directory.