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US primary insurer Allstate has now finalised one of the largest catastrophe bonds in its history, with its new Sanders Re II Ltd. (Series 2024-3) issuance now priced to provide the company $650 million of reinsurance protection, some 86% more than the initial target for this deal.
In fact, with the notes now priced, we can confirm this will be Allstate’s second largest catastrophe bond, with only a 2014 issuance having been bigger out of the now twenty two the insurer has sponsored in its history.
Read about every cat bond sponsored by Allstate in our Deal Directory.
Allstate returned to the catastrophe bond market in November, with an initial target to secure $350 million in multi-peril reinsurance protection, covering losses in all US states except for Florida, from this Sanders Re II 2024-3 transaction.
As we then reported in our first update, the target size for Allstate’s latest cat bond had risen, with the company lifting it 43% to a goal to secure $500 million of protection from this new cat bond issuance.
In a second update we then reported that Allstate was seeking even more reinsurance from this Sanders Re II 2024-3 cat bond issuance, with an increased target of $650 million of protection.
Now, sources have told us that Allstate has successfully secured the second largest catastrophe bond cover it has sponsored in its history, with the notes pricing to provide that 86% upsized $650 million of protection to the company.
Having nearly doubled the issuance during its marketing, Allstate is now set to add $650 million in reinsurance cover to its tower from the capital markets with this deal, which will take it to the top of our cat bond sponsor leaderboard.
The notes provide Allstate with reinsurance protection for certain losses from US (ex-Florida) named storm, earthquake, severe weather, wildfire, volcanic eruption, or meteorite impact events, on a per-occurrence and indemnity trigger basis, with one tranche of notes in-force for just over four years, the other for four years exactly.
The Class A tranche of notes were originally $150 million, which was then lifted to $200 million at the first update, and then lifted again to be $300 million in size.
The Class A notes will be on-risk from January 1st 2025 through March 31st 2029 and they come with an initial expected loss of 0.88% and were first offered to investors with spread price guidance in a range from 4.25% to 4.75%. That price guidance was lowered to 4% to 4.25% and eventually they priced at the lower-end of 4%.
The riskier Class B tranche of note offering was originally $200 million in size, but then increased to $300 million at the first update, but also increased again to $350 million.
The Class B notes will be on-risk from April 1st 2025 through March 31st 2029, have an initial expected loss of 1.75% and were first offered to investors with spread price guidance in a range from 5.5% to 6.25%. That price guidance fell to a new range of 5.25% to 5.5% and we’re now told these were also successfully priced at the low-end of 5.25%.
Both of the tranches of cat bond notes can attach their coverage at $4.25 billion of losses to Allstate, but the difference is that the Class A notes will span an almost $2 billion layer of the reinsurance tower above that, while the Class B notes will only span a $950 million layer.
This is a strong result for Allstate, adding significant new capital markets backed collateralized reinsurance for the sponsor.
Once this new cat bond issuance has settled, it will take Allstate to the top of our catastrophe bond sponsor leaderboard.
You can read all about this Sanders Re II Ltd. (Series 2024-3) from Allstate and every other catastrophe bond issuance in the extensive Artemis Deal Directory.
English (US) ·