Texas’ TWIA suffered 40% hike in reinsurance rate-on-line to 9.1%
The Texas state insurer of last resort, the Texas Windstorm Insurance Association (TWIA), is paying a 9.1% rate on line for its 2023-24 $2.43 billion reinsurance program, up 40% from a 6.5% rate in the prior year’s programme.
Gross ceded premiums associated with the $2.243 billion in coverage will total $204.4 million compared to a budgeted estimate of $225.5 million, according to a presentation made for the August 8 TWIA board meeting.
“That's actually a little bit lower than the estimate for our budget where we really didn't know where the rates were going to be, but they're significantly higher than the prior year,” CFO Stuart Harbour told the board of governors.
TWIA is still ahead of a “true-up” later in the year to adjust reinsurance coverage to any larger than expected exposure. Those exposure levels are largely dependent on how former clients of defunct carrier Weston find their way on the market, he indicated.
Costs are being booked by the TWIA to the tune of $34 million per month June through November. Ceding commissions soften the blow over those six months by $8.6 million, TWIA data indicated.
TWIA had previously announced closure of its 2023-24 programme ahead of schedule near the end-May. The programme consists of $1.2 billion of collateralised catastrophe bonds and $1.043 billion of traditional reinsurance as the group works its way above member assessments and public securities to a targeted $4.508 billion limit.
The new traditional programme, secured by TWIA’s broker Gallagher Re, covers $1.043 billion excess of $2.965 billion side by side with $500 million in fresh cat bond issuance from unit Alamo Re.
Existing 2021 issuance from Alamo Re covers $500 million from $2.47 to $2.97 billion and another $200 million from 2022 stretches down to the $2.27 billion attachment point. Below that, member assessments and public securities.
TWIA had officially targeted the total limit of $4.5 billion to just hit its 1:100 PML minimum mandate, but had also looked at, then rejected, other options including ILWs which would hit an alternative PML calculation at $5.2 billion.
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