First catastrophe bond for Texas FAIR Plan secured, $200m Bluebonnet Re 2025-2
The first catastrophe bond for the Texas FAIR Plan Association (TFPA) has now been finalised to provide the targeted $200 million of multi-peril reinsurance protection, while the notes from this Bluebonnet Re Ltd. (Series 2025-2) issuance have been priced at the upper-end of guidance, Artemis has learned.
The Texas FAIR Plan was established in 1995 as a way to provide insurance coverage to residential properties that are denied by other carriers and it is managed by the Texas Windstorm Insurance Association (TWIA).
This first cat bond for the Texas FAIR Plan began marketing back at the mid-point of April with a goal to secure $200 million in multi-year and fully-collateralized reinsurance from the capital market.
As we reported in our first update on this deal, the target size remained at the $200 million level, while the price guidance had been lifted to the top-end of the initial guidance range.
Now, we’ve learned that the targeted $200 million of reinsurance limit has now been secured for the TFPA, with this Bluebonnet Re 2025-2 cat bond now priced at the upper-end of guidance level.
The now confirmed as $200 million of Bluebonnet Re Series 2025-2 Class A catastrophe bond notes will protect the TFPA with reinsurance against losses from named storms, severe thunderstorms and wildfires in the State of Texas, all on an indemnity trigger and per-occurrence basis and running across a two-year term to early June 2027.
The $200 million of Bluebonnet Re Series 2025-2 Class A catastrophe bond notes come with an initial expected loss of 4.07% and were initially offered to catastrophe bond funds and investors with spread price guidance in a range from 11% to 12%.
The pricing was then updated to guidance at the upper-end, which is where the notes have now been priced for a spread of 12% to be paid to cat bond investors, we understand.
Meaning the Texas FAIR Plan will now benefit from the targeted $200 million of reinsurance protection from the capital markets with this first catastrophe bond to protect the Association, providing a welcome diversification within its reinsurance tower and locking in the coverage for a two-year term.
As we also reported yesterday, the manager of the TFPA, the Texas Windstorm Insurance Association (TWIA), secured an upsized $550 million of reinsurance for its tower from the Bluebonnet Re 2025-1 issuance that has been in the market at the same time.
Read all about this new Bluebonnet Re Ltd. (Series 2025-2) catastrophe bond for the Texas FAIR Plan Association and every other cat bond transaction in the Artemis Deal Directory.
