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Hannover Re cat bond to transfer Texas named storm risks to capital markets

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Hannover Re S.E. has completed an insurance-linked security transaction that transfers named storm risks for the Texas Windstorm Insurance Association to the capital markets, the German reinsurer said Wednesday.

Institutional investors had made $400 million available for the catastrophe bond, which will mature in three years, Hannover Re said in a statement.

The risks covered by the bond are limited to the state of Texas, Hannover Re said.

The TWIA is the state of Texas' insurer of last resort for wind and hail losses for Gulf Coast property owners.

The bond will provide three years of catastrophe protection and coverage of up to $3.25 billion, according to a note by Fitch Ratings Inc.

The bond, issued via Bermuda-based special purpose vehicle Alamo Re Ltd. is based on an indemnity trigger, Fitch's note said.