TWIA has enough support to finalise reinsurance renewal in next few days

The Texas Windstorm Insurance Association (TWIA) has secured enough support to complete its reinsurance renewal in the coming days, and its broker Gallagher Re will work with staff to get lines signed, it was revealed today during a TWIA Board meeting.

Earlier this year, TWIA’s Board approved the insurers 1-in-100 year PML for the 2024 storm season at the level of $6.5 billion, a substantial year-on-year rise as a result of exposure growth and inflation.

It means that TWIA requires $4.05 billion in reinsurance in-force for 2024, alongside $2 billion of member assessments and public securities, plus $450 million of catastrophe reserve trust fund (CRTF) funding that has been built up.

We wrote last week that TWIA had made significant progress towards completing its reinsurance renewal, with $750 million of its traditional reinsurance needs already secured in April.

Today, during a Board meeting, the association’s reinsurance program was again discussed, with an update provided by Allen Cashin, EVP of Alternative Distribution NA at TWIA’s reinsurance broker, Gallagher Re.

“At this point, it’s a June 1st renewal. A large majority of it has been placed, I think we were left with about $1.2 billion in limit that needed to be placed and as of now we have enough support to execute and sign the program over the next couple of days,” said Cashin.

He went on to note that he will work with TWIA staff on Wednesday and Thursday of this week to finalise the entire program.

“But at this point, we have enough support just barely over the $1.2 billion of required capacity that’s leftover. So we are just over $1.2 billion and then we’ll work with staff to sign lines over the next couple of days,” he said.

Expanding on TWIA’s reinsurance program for the upcoming wind season, Bill Dubinsky, Managing Director and CEO of Gallagher Securities, explained that to get to the $4 billion figure, the total amount of cat bonds increased by $900 million, with $1.4 billion placed this year.

“The whole structure that you see here is designed to both access reinsurance capacity and cat bond capacity on a differentiated basis, to get to reinsurers as well as investors who have different risk-return appetites.

“That really was something that hadn’t been done as much in the past on the cat bond side, but was really key in getting to that $1.4 billion structure,” said Dubinsky.

Both Dubinsky and Cashin praised the TWIA staff members for their support and hard work, notably in meeting with reinsurers and investors throughout the renewal process.

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