The Texas Windstorm Insurance Association (TWIA), the residual market property insurer for the State of Texas, has increased the size of its new catastrophe bond issuance for a second time, with now $550 million of reinsurance expected to be secured, Artemis can report.The Texas Windstorm Insurance Association (TWIA) came back to the catastrophe bond market around mid-April with an initial target to secure at least $375 million of fully-collateralized backed reinsurance from this Bluebonnet Re 2025-1 deal.As we then , we’d learned that TWIA’s target size for this new cat bond was increased, with between $490 million and $500 million of reinsurance limit then being sought.Now, we’ve heard from sources that the overall size for the new Bluebonnet Re 2025-1 cat bond issuance has been raised again for TWIA, with $550 million of reinsurance now the expected result once the deal is finalised.

At the same time, we understand the price guidance has now been fixed with the lower two tranches of cat bond notes seeing their spread locked-in at levels below the initial guidance, while the riskiest layer of notes looks set to price in the upper-end of guidance.This will become the eleventh catastrophe bond sponsored by the Texas Windstorm Insurance Association (TWIA) that we have analysed and listed in our extensive .You can filter the Directory by sponsor to see only TWIA’s cat bonds.

As a result of the latest update, which we believe will end up being final, the Bluebonnet Re 2025-1 cat bond notes will provide TWIA with $550 million in reinsurance protection against Texas named storms and severe thunderstorms, on an indemnity trigger and annual aggregate basis, across three annual aggregate risk periods, running to maturity in June 2028.What was a $150 million Class A tranche of notes first saw their target size raised to $200 million, but we’re now told are set to price at $250 million in size.These Class A notes have an initial expected loss of 1.84% and were first offered with spread price guidance of 6.5% to 7.25%, which was then lowered to 5.75% to 6.5% and we’re now told are expected to price at the low-end of the updated range at 5.75%.

What was a $150 million Class B tranche of notes are now expected to provide $200 million of protection for TWIA.The Class B notes have an initial expected loss of 3.18% and were initially offered with spread price guidance of 9% to 10%, which was first lowered to 8.5% to 9% and we’re now told are expected to price at the low-end of 8.5%.The final originally $75 million Class C tranche of notes first saw their target raised to between $90 million and $100 million in size, and we’re told will be finalised at the upper-level of $100 million.

The Class C notes are riskier, having an initial expected loss of 4.5% and were initially offered with spread price guidance of 11% to 12%, which was revised to a new range of 11.5% to 12% and we’re now told are expected to price at 11.75%, so in the upper-half of initial guidance.Meaning TWIA will secure some 47% more than its initially targeted reinsurance from its latest catastrophe bond, with this first issuance under the Bluebonnet Re Ltd.special purpose vehicle upsizing to $550 million, while pricing is set to complete at low-levels for the more remote risk tranches of notes and within guidance for the riskier layer.

With already $1.9 billion of cat bond coverage in-force for the coming 2025 wind season, TWIA now looks set to have $2.45 billion of catastrophe bond backed reinsurance in-force.TWIA needed to secure $1.727 billion in new reinsurance or cat bonds this year, so after this cat bond the insurer will require a further $1.177 billion of reinsurance from the traditional or collateralized and ILS markets.TWIA .

With now looking like $2.45 billion of that set to come from the catastrophe bond market, it means the cat bond market’s participation in the TWIA reinsurance tower will stand at roughly 58% for 2025.TWIA has been directly and remains one of the largest sponsors in our cat bond market sponsor leaderboard.Read all about this new catastrophe bond for the Texas Windstorm Insurance Association and every other cat bond transaction in the Artemis Deal Directory..

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