Jim Murphy, Chief Actuary of the Texas Windstorm Insurance Association (TWIA), said during a Board meeting today that rates on line that the association is seeing in the market right now are flat, if not potentially down when compared with last year.
At TWIA’s Board meeting held today, reinsurance funding was discussed, and it was revealed by the association’s broker, Gallagher Re, that TWIA’s placement, which renews at June 1st, 2025, will likely be completed next week and well within budget.
As a reminder, TWIA needed $4.227 billion in reinsurance and catastrophe bond coverage to have enough funding to meet its $6.227 billion 1-in-100 year probable maximum loss (PML) for the 2025 storm season.
This includes $1.9 billion in existing catastrophe bonds issued in 2023 and 2024, $600 million in multi year traditional reinsurance originally placed in 2024, and $1.727 billion in new traditional reinsurance and catastrophe bonds.
Commenting on the placement of the $1.727 billion in new coverage, Gallagher Re explained that, “All of the reinsurance will be done well in advance of the June 1st inception date. It will probably be done fully next week, and it will be placed well below the budget that was approved by the board in the last meeting.”
The budget was set at $485 million and Gallagher Re confirmed that the spend is projected to be just $416 million, with a projected rate on line of 9.84%.
During the meeting, Chief Actuary Murphy was questioned on the rate on line and how that compares to budget.
“I think by and large, after taking into account the increase in our exposures, rates on line that we’re seeing in the market right now are flat, if not potentially down a little bit from last year,” he confirmed.
Gallagher Re confirmed that this was an appropriate assessment, and also provided some colour on the current rate environment in the reinsurance market.
“With a $50 billion California wildfire this year, in January, approximately $20 billion of that was ceded to the reinsurance market. So, it is interesting that reinsurance prices are coming down a little bit despite one of the biggest cat losses we’ve ever had in the US.
“That tells you the amount of capital in the reinsurance market. Really good results in ‘23 and ‘24 for reinsurers, and then, like you mentioned earlier, attracting new investors that want to support Texas Windstorm only brings in more asset managers and reinsurers that want to support it, thus more competition in the price,” said the broker.
You can see TWIA’s preliminary 2025 funding tower below, which reveals where the new cat bond, the $500 million Bluebonnet Re Ltd. (Series 2025-1) transaction, and new traditional reinsurance coverage is expected to sit.
The post TWIA says rates on line ‘potentially down’ as June 1 reinsurance renewal nearly placed appeared first on ReinsuranceNe.ws.