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Report: TWIA to launch $300M cat bond

Texas Windstorm Insurance Association is bringing a $300 million multiperil catastrophe bond to the market, Alamo Re Ltd. series 2018-1, Artemis reported.

TWIA will enter into a reinsurance agreement with Hannover Rück SE, which will enter into a retrocession agreement with Alamo Re Ltd. in connection with the deal. Hannover Re will act as the ceding reinsurer, according to the report.

The cat bond will provide TWIA with fully collateralized reinsurance protection for Texas named storms and Texas severe thunderstorms over a three-year term, on an annual aggregate basis using an indemnity trigger.

The attachment point of the notes will be $2.8 billion and the exhaustion point will be $4.2 billion. The cat bond will have an initial attachment probability of 2.19%, an initial expected loss of 1.65%, and a coupon price guidance of 3.5% to 4%, according to the report.