After legislative changes enacted in 2025 reduced the level of catastrophe financing required by the Texas Windstorm Insurance Association from a 1-in-100-year Probable Maximum Loss (PML) to a 1-in-50-year Probable Maximum Loss (PML), the TWIA Board of Directors adopted a $4.3 billion 1-in-50 PML for the 2026 storm season.
The one-fiftieth PML represents a loss level with a probability of exceeding 2% per year and serves as the statutory benchmark for the minimum total available funding, including reinsurance and other risk transfer mechanisms, that TWIA must maintain during the upcoming storm season.
Readers may recall that Texas House Bill 3689, passed last summer, states: “The association shall maintain a total available loss fund in an amount not less than the maximum loss that the association may incur in a disaster year with a one-fiftieth probability.
“Required funding levels shall be achieved, if necessary, through the purchase of reinsurance or the use of alternative financing mechanisms, or both, to supplement or complement the trust funds, public securities, financial instruments, and assessments authorized by this chapter.”
Shortly after the bill passed, TWIA said its reinsurance requirements for the 2026 wind season could fall significantly under the new 1/50 funding standard.
Now, that expectation appears to be coming true.
Following a recent board meeting, TWIA voted to provide approximately $2.28 billion in reinsurance protection for the 2026 hurricane season, as well as approximately $2 billion in statutory funding.
The program is expected to include new issuances of insurance and existing multi-year catastrophe bonds, backed by what TWIA says are the most favorable terms achievable in the market.
All told, this financing structure supports the 1/50 PML requirement of $4.3 billion in 2026, down from the 1/100 mandated level of $6.227 billion a year ago.
For more details on TWIA’s multi-year cat bonds, see our sister publication Artemis’ rankings, which list all outstanding cat bonds and insurance-related securities (ILS) tracked in the Artemis cat bond and insurance-related securities trading directory, broken down by sponsor and cedent.
