The Texas Windstorm Insurance Association (TWIA), the residual market property insurer for the State of Texas, has returned to the catastrophe bond market with an initial target to secure $450 million of capital markets backed reinsurance from an issuance, Artemis has learned.A year ago, the Texas Windstorm Insurance Association (TWIA) secured $550 million of named storm and thunderstorm reinsurance protection from a Bluebonnet Re Ltd.(Series 2025-1) catastrophe bond.One year earlier, TWIA sponsored the $1.4 billion cat bond issuance, which became its largest yet.

As a result, currently TWIA has $1.9 billion of outstanding Alamo Re cat bonds and the $550 million of Bluebonnet Re cat bonds still in-force, .But, with $500 million of Alamo Re 2023-1 cat bonds set to mature this June, currently TWIA would be set to enter the 2026 hurricane season with $1.95 billion of cat bond risk transfer in-force., suggesting only slightly over $330 million of net-new risk transfer is required to be purchased.

But, the TWIA Board has the option to buy more risk transfer if deemed appropriate and cost-effective, while it does also have the option to redeem other cat bonds early if it so chooses.So the exact mix of risk financing TWIA goes into the storm season with remains to be seen.But now we’ve learned that TWIA is back in the catastrophe bond market with a new deal with an initial target size of $450 million, which might suggest it is set to buy a little more than required, or that it may intend to adjust some of the older cat bond deals, or even redeem them.

That remains to be seen, but if the insurer maintains its other cat bonds it could mean little to no share of its risk transfer tower for traditional reinsurance sources in 2026.That will become clearer as its renewal progresses over the coming weeks, we imagine.For 2026, the residual market insurer for the State of Texas has reverted back to utilising its Alamo Re Ltd.

special purpose insurer (SPI) which is also based in Bermuda for its new cat bond sponsorship, we are told.Alamo Re Ltd.is targeting issuance of three tranches of Series 2026-1 notes that will be sold to investors and the proceeds be used to support the collateral needs of the reinsurance agreements to protect TWIA.

At least $450 million in reinsurance protection is being sought across the three tranches of Series 2026-1 notes that Alamo Re will issue.All three tranches of notes will provide TWIA with reinsurance against Texas named storms and severe thunderstorms, on an indemnity trigger and annual aggregate basis, the same as its previous cat bonds under the Alamo Re  vehicle have provided the insurer.One tranche of notes will have a three-year term, while the other two only two-years, which likely reflects TWIA seeking greater optionality in future as its risk transfer needs evolve under the new legislative mandate for 1-in-50 year coverage.

Each will feature annual aggregate risk periods, running to maturity in June 2028 for the two year tranches and June 2029 for the three year tranche, while we understand there is an aggregate event deductible of $50 million in force for loss events to qualify.A $200 million Class A tranche of Alamo Re Series 2026-1 notes would cover TWIA for losses between an attachment of $3.625 billion and exhaustion of $4.3051 billion over a three year term, giving the notes an initial attachment probability of 3.08% and an initial base expected loss of 2.79%.These notes are being offered with spread price guidance of 6% to 7%, sources said.

An also $200 million Class B tranche of notes will cover TWIA for losses from an attachment of $2.625 billion to exhaustion at $3.625 billion over a two year term, giving the notes an initial attachment probability of 4.49% and an initial base expected loss of 3.63%.These notes are being offered with spread price guidance of 7.75% to 8.75%, we’re told.The final $50 million Class C tranche of notes will cover TWIA for losses from an attachment of $2.025 billion to exhaustion at $2.625 billion, giving the notes an initial attachment probability of 5.65% and an initial base expected loss of 5.01%, so are the riskiest and lowest down layer.

These notes are being offered with spread price guidance of 11% to 12%, we understand.Each of the three tranches of notes will sit on top of each other within the TWIA reinsurance tower it seems, alongside outstanding cat bonds and any traditional reinsurance it elects to purchase this year.It’s good to see TWIA back in the market even as its reinsurance and risk transfer needs have changed meaningfully in 2026.

It will be interesting to see whether TWIA opts to keep its outstanding cat bond coverage in-force, in which case the vast majority of its tower could be funded by the catastrophe bond market in 2026.As we said, how the mix is finalised will become clearer over the coming weeks in the run-up to the mid-year renewals.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..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.