The Texas Windstorm Insurance Association (TWIA) is forecasting a roughly 10% reduction in its reinsurance and catastrophe bond needs for 2027, as its Catastrophe Reserve Trust Fund (CRTF) is projected to grow from $25 million this year to as much as $350 million ahead of the renewals.
The association is also forecasting a 2027 risk transfer budget of around $173 million, nearly 18% below this year’s almost $210 million, with softer reinsurance and catastrophe bond pricing expected to help reduce costs.
At the mid-year 2026 renewals, TWIA secured roughly $2.28 billion of risk transfer and reinsurance, including $1.05 billion of catastrophe bond limit.
That was down from $4.227 billion in 2025, after the Board chose to fund to a 1-in-50-year probable maximum loss (PML) rather than the 1-in-100-year level.
The 1-in-50-year target remains in place for 2027, after the Board recently rejected a proposal to return to the 1-in-100-year level and use assessments to fund part of the additional cost.
TWIA currently projects that the minimum required funding for the 1-in-50-year level will rise slightly to $4.4 billion in 2027, from $4.3051 billion this year.
But the larger CRTF, alongside around $2 billion of statutory funding expected to remain available, means the association estimates it will need to secure about $2.05 billion of reinsurance and catastrophe bonds next year, just over 10% less than this year.
That lower limit requirement, combined with softer market pricing, is driving the projected $173 million risk transfer budget for 2027.
Preliminary 2027 budget information is being presented to the TWIA Board this week, based on projected exposures, the expected attachment point and prevailing reinsurance and catastrophe bond market conditions. Exposure growth is also expected to remain modest.
Notably, TWIA’s existing $1.05 billion of catastrophe bond protection is scheduled to remain in place through 2028.
Assuming that coverage is retained, the association could therefore need to place only around $1 billion of fresh limit next year, although it is unclear whether any of this year’s traditional reinsurance is multi-year.
The proposed budget points to TWIA entering 2027 in a stronger position, with a larger reserve fund, limited exposure growth and more favourable risk transfer pricing.
Catastrophe bonds are likely to remain a key part of the programme, given TWIA’s preference for the certainty and flexibility they provide.
Read more about TWIA’s capital markets activity in the Catastrophe Bond & Insurance-Linked Securities Deal Directory of our sister publication, Artemis.
