Allstate targets $ 350 million from Sanders Re II named cat bond
U.S. primary insurance company Allstate is back with its latest catastrophe bond, a $ 350 million deal with Sanders Re II Ltd. of named perils.
Allstate recently recovered on catastrophe bonds and has gaps in its reinsurance arrangements after recent catastrophe events, including Hurricane Ida. So it’s encouraging to see the company come back to market with another deal.
Allstate has regularly sponsored catastrophe bonds to reinsure its risks across the United States since at least 2007 and on behalf of its subsidiaries in Florida as well.
This latest transaction, the second in 2021, will see Bermuda-based Special Purpose Insurer (SPI) Sanders Re II Ltd. seeking to issue two tranches of notes, the sale of which will provide collateral to underpin new reinsurance arrangements. between structure and Allstate. , to channel the financing guaranteed by the financial markets towards its reinsurance tower.
The currently planned $ 350 million notes will provide Allstate with property and casualty reinsurance protection in the United States over three years and four months, with the first four months covering the insurer only per event, and then the remaining three years providing with both event and aggregate reinsurance protection, sources told Artemis.
Series 2021-2 Notes issued by Sanders Re II will provide Allstate with coverage for losses due to named perils of storm, earthquake, severe weather, wildfire, volcanic eruption, meteor impact, in all states with the exception of Florida, all on a trigger basis.
There has been a slight adjustment to the terms of Allstate’s latest cat bond, in that all perils are explicitly named, whereas, as in recent years, Allstate Sanders Re’s cat bonds have all featured a class ” other perils ”, which included a wider range of additional loss events.
With the insurance-related securities market (ILS) and reinsurance and retrocession more broadly, continuing to tighten on a targeted basis on named risks, particularly in aggregate hedges, this seems to reflect this and is encouraging to see.
Sanders Re II Ltd. will offer $ 200 million of Class A Notes Provide Allstate with event-based reinsurance protection throughout the risk period of more than three years, amounting to $ 3.75 billion in losses and a $ 4 billion depletion, we understand.
The Class A Notes will have an initial expected loss of 0.8457% and are offered to investors with coupon hints in a range of 3% to 3.75%.
Meanwhile, a $ 150 million tranche of Class B notes will provide Allstate with event-based protection for the first four months, through the end of April 2022, and then comprehensive annual reinsurance over the next three years, aligning thus the duration of coverage with insurers. round of global reinsurance.
The Class B note tranche attaches to the same $ 3.75 billion while on a per-occurrence basis, we understand, depleting at $ 3.975 billion, but then adjusts to attach to 2, $ 5 billion on an aggregate basis and spans a layer of $ 500 million to $ 3 billion for these three annual risk periods. Class B tickets are offered with price indications in a range of 2.75% to 3.25%.
These are both relatively high in Allstate’s reinsurance tower for catastrophe bonds.
There is room for both tranches to increase, if investor demand permits.
You can read all about this new Sanders Re II Ltd. catastrophe bond. (Series 2021-2) from Allstate and all other cat bonds ever issued in our Artemis Deal Directory.