TWIA will rush 2023 renewals and Alamo Re cat bond replacements

The Texas insurer of last resort, the  Texas Windstorm Insurance Association (TWIA) will set targets for its mid-2023 reinsurance renewals already in January and move towards an early replacement of expiring 2020 Alamo Re bonds “a few months” ahead of expiry to get ahead of the capacity crunch.

Warned by its advisor and broker Gallagher Re to move early in tough market conditions, the TWIA authorised its staff to set a 1:100 PML target for the mid-year renewals already in January and to prep the replacement cat bonds early, notes to the December board meeting show.

“It would be prudent for TWIA to get out ahead of those maturities, to move much earlier than normal rather than trying to time whether demand outstrips supply or vice-versa,” the CEO of Gallagher Securities, William Dubinsky, told the TWIA board.

Gallagher Re suggests TWIA announce issuance in January ahead of a potential February sale, then mop up any lingering market interest in April, Dubinsky said.

“All of this moving earlier is designed to secure your statutory obligation and make sure we are able to maxi the blend of capacity that comes from the cat bond market,” he said.

After 9M of 2022, the TWIA had laid claim to $94.4 million in net income, down 9.4% year on year, but well above the $76.2 million plan, notes to the meeting additionally showed.

The profit came on a 7.1% increase in net premiums earned, leveraged against a 11.9% decline in direct losses and loss adjustment expense.

TWIA had issued more than 12,100 policies to former Weston and FedNat policyholders as of November 10. Direct written premium growth of 31.9% for the first 9M is well ahead of the 12.8% earned-in growth.  Direct written premiums are now 20% ahead of plan.

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