The first catastrophe bond for the Texas FAIR Plan Association (TFPA) is now in the market, with the insurer of last resort targeting $200 million or more in multi-peril reinsurance from the capital markets with its debut issuance.The Texas FAIR Plan Association (TFPA) was established in 1995 to provide coverage to residential properties that are denied by other insurance carriers and it is managed by the Texas Windstorm Insurance Association (TWIA).This debut catastrophe bond for the Texas FAIR Plan has come to market at the same time as one for TWIA, also using the Bluebonnet Re structure, which you can also .Bluebonnet Re Ltd.

is a recently registered Bermuda-based vehicle and it will issue a single tranche of Series 2025-2 notes that will be sold to investors and the proceeds be used to support the collateral needs of the reinsurance agreements to protect the Texas FAIR Plan Association (TFPA).Similar to cat bonds issued to benefit TWIA, we understand that global reinsurance firm Hannover Re will act as the ceding reinsurer to front the capital markets through a retrocession agreement, then entering into a reinsurance agreement with TFPA to protect that entity and cascade the cat bond investor backed protection to it.From its debut Bluebonnet Re Series 2025-2 catastrophe bond, the TFPA is targeting at least $200 million in multi-year and fully-collateralized reinsurance from the capital markets.

We’re told that the notes will provide TFPA with reinsurance to protect it against losses from named storms, severe thunderstorms and wildfires in the State of Texas.This protection will be afforded on an indemnity trigger and per-occurrence basis, running across a two-year term to early June 2027, we understand.The $200 million or greater in Bluebonnet Re Series 2025-2 Class A catastrophe bond notes would attach their coverage after the TFPA suffers a loss of $180 million or greater, covering a share up to $500 million.

The Class A notes come with an initial attachment probability of 6.44%, an initial expected loss of 4.07% and sources said they are being offered to catastrophe bond funds and investors with spread price guidance in a range from 11% to 12%.This is the first time a catastrophe bond will cover the Texas FAIR Plan Association’s exposures, having not been incorporated into any of TWIA’s previous cat bond issues as far as we’re aware.As such, it’s good to see another new sponsor in the market and the inclusion of wildfire risk in Texas makes this a little different for investors as well, meaning it will be interesting to see how investor appetite for the deal shapes up over the coming weeks.

Read all about this new catastrophe bond for the Texas FAIR Plan Association and every other cat bond transaction in the Artemis Deal Directory..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.