Alamo Re Ltd. (Series 2021-1)

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The Texas Windstorm Insurance Association (TWIA) has now launched a new early catastrophe bond that will at least partially replace its $ 400 million Alamo Re 2018-1 cat bond transaction maturing in July.

For its latest catastrophe bond, TWIA returned to its Bermuda-based specialist insurer (SPI) Alamo Re Ltd. after venturing to Singapore for its cat 2020 bond issue.

For this new cat bond, TWIA is seeking at least $ 250 million in fully guaranteed, multi-year reinsurance protection against losses caused by named storms and severe thunderstorms in Texas.

As with all of TWIA’s catastrophe bonds to date, the company uses the services of global reinsurance company Hannover Re as the ceding reinsurer, while TWIA is the reinsured party.

For this new cat bond, TWIA is seeking at least $ 250 million in fully guaranteed, multi-year reinsurance protection against losses caused by named storms and severe thunderstorms in Texas.

But it should be noted that there is a lot of room for this new chat obligation to increase, if prices and market conditions allow.

Hannover Re will face the SPI, entering into retrocessional reinsurance agreements with it, while entering into reinsurance agreements with TWIA to pass coverage.

SPI, Alamo Re Ltd., will offer investors a one-time tranche, currently $ 250 million, of Class A notes, with the proceeds from their sale being used to secure retroactive agreements with reinsurer Hannover Re.

The $ 250 million in notes will ultimately provide TWIA with a three-year source of comprehensive annual reinsurance protection and triggered indemnity, covering losses caused by designated storms and severe thunderstorms in Texas.

To qualify, a named storm or severe thunderstorm must drive TWIA at least $ 50 million from UNL, according to sources, with an aggregation of qualifying losses over three consecutive one-year risk periods beginning June 1.

We’re told Alamo Re 2021-1 Class A tickets will cover a large layer of TWIA’s reinsurance tower, with $ 2.1 billion in losses and up to $ 4.03 billion initially.

This gives the currently $ 250 million notes an initial expected loss of 1.76%, while the notes are offered to investors in cat bonds with price indications between 4% and 4.75%, we are told. .

By comparison, TWIA’s Alamo Re 2019-1 chat bond saw an expected initial loss of 1.8% and a price of 4.5%, while TWIA’s Alamo Re II Pte. The cat 2020-1 bond had an expected initial loss of 1.78% and a price of 5.75%, both of which also reported $ 2.1 billion in losses.



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