The Texas Windstorm Insurance Association (TWIA) has now finalized reinsurance and risk transfer for the 2023 wind season, with its tower set at a target of $4.508 billion after the insurer secured an additional $1.043 billion in traditional reinsurance.
As we previously wrote, TWIA is in the market for an additional $1.043 billion in reinsurance protection after its Board voted to establish its 1:100 probability of maximum loss (PML) for the 2023 hurricane season of $4.5 billion, including LAE.
TWIA has now completed its reinsurance and risk transfer placement for 2023, which includes a mix of traditional reinsurance and catastrophe bonds, as well as other funding.
For 2023, TWIA’s risk transfer portion of the tower comes with a $2.265 billion loss to $4.508 billion. Of this, $1.2 billion came from catastrophe bonds and $1.043 billion from the traditional reinsurance market.
From the $2.265 billion attachment point to $2.965 in losses sits protection in the form of catastrophic bonds. On top of this, so included in the $2.965 billion to $4.508 billion, sits $1.043 billion in traditional reinsurance coverage and an additional $500 million in catastrophe bond coverage from its 2023 issuance.
In total, then, TWIA has secured nearly $2.238 billion in reinsurance and risk transfer in the cat bond for the 2023 wind season.
In contrast, the 2022 reinsurance tower has $2.016 billion in reinsurance and cat bonds, with $1.1 billion from the latter.
You can compare TWIA reinsurance and funding towers for 2022 and 2023 below:
It’s worth noting that in early May a memo said TWIA would seek to obtain an additional $1.043 billion in protection from a mix of traditional reinsurance and from the capital markets.
However, TWIA decided to buy it all from the traditional market, which could be due to several reasons, such as the stronger appetite of reinsurers for risk or that the cat bond markets are not as you are welcome as first expected.
However, TWIA has now acquired the level of reinsurance and risk transfer required for the upcoming wind season.