The Texas Windstorm Insurance Association (TWIA) board approved a $500 mn line of credit at its final meeting before the start of the 2025 hurricane season.
JP Morgan Chase will act as the lead lender, supplying $400 mn of the facility. Bank of America will provide the remaining $100 mn
TWIA Chief Financial Officer Stuart Harbour
The terms match last year’s agreement, with an upfront fee of 10 basis points and a 42.5 basis point commitment fee on unused credit.
This results in a cost of $177,000 per month when the line is active, down from $197,900 two years ago when the commitment rate stood at 47.5 basis points.
The new agreement includes an accordion feature allowing TWIA to access an additional $200 mn if needed after a major catastrophe.
Use of this additional borrowing capacity requires lender approval but streamlines the process in case of emergency, Harbour added.
If TWIA draws on the credit during the hurricane season, it will cancel the facility as soon as possible to avoid penalties. Based on current forecasts, the earliest cancellation date is Dec. 29.
TWIA continues to rely on private lending sources, though state lawmakers are developing legislation to permit public funding for extraordinary losses and administrative costs related to the association’s operations.
In the first quarter, TWIA reported $160.3 mn in net written premiums, up from $139.5 mn a year earlier. Net income reached $140.3 mn, compared with $78.02 mn in the prior year.
Chief Actuary Jim Murphy attributed the increase to a 10% rise in policyholders over the past year, driven by growth in personal lines. Commercial policy volume declined during the same period.
We have more policies on our books now than we have ever had and the exposure limits are higher than they have ever been. That literally translate into a larger exposure come hurricane season time.
Chief Actuary Jim Murphy
Murphy noted more policies now carry limits near TWIA’s upper threshold. He cited renewal increases and demand for higher limits among new policyholders relative to the existing portfolio.
