Alamo Re (Texas Windstorm Insurance Association, 2014)
The first catastrophe bond of the public windstorm insurer for the Texas coast, issued in 2014 for 400 million dollars on an annual aggregate basis.
The Texas coast is insured against wind by a public association of last resort, whose funding after a major hurricane rests on a sequence of sources: premiums, reserves, borrowing, contributions from market insurers, then reinsurance. After three years of discussion, its board added a catastrophe bond to its reinsurance in 2014. The structure runs through a reinsurer acting as transformer, which insures the association and retrocedes to the Alamo Re vehicle. The trigger is indemnity-based and the cover annual aggregate, which protects against a season of several storms and not only against a single one. The transaction shows how a public body diversifies its capacity beyond the reinsurance market.
Launched at 300 million dollars, the Alamo Re 2014-1 series was raised to 400 million in June 2014 and priced at the low end of the narrowed range, for three years of protection against Texas named storms.
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