Allstate
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This follows February’s cat losses coming in below the $150mn reporting threshold.
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The multi-peril coverage was due to expire in June 2026.
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This follows January pre-tax cat losses of $276mn.
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Monthly cat losses were driven by two major events.
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Unfavorable prior year reserve re-estimates, excluding catastrophes, totaled $199mn in Q4, with approximately $148mn related to personal auto, including costs for litigation claims.
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Earlier today, the insurer updated the spread on the cat bond which has settled at 5.75%, and updated the target price to $300mn-$350mn.
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Allstate increased the target size of the bond to $300mn-$350mn, up from $200mn.
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Sanders Re III will provide coverage for the District of Columbia and all US states apart from Florida.
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Most of the losses, around 80%, were the result of two wind and hail events.
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Investors will have to wait an additional three years for collateral to be returned.
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Allstate reported cat losses of $1bn and $885mn for June and May.
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The downgrades reflect the negative impact of challenging macro-economic trends on underwriting results and risk-adjusted capitalization.
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The carrier’s Florida reinsurance tower’s top layers comprise a total of $450mn in Class A Sanders Re cat bond coverage.
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Nearly $148mn of the unfavorable reserve development was related to National General, primarily driven by personal auto injury coverages.
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The carrier said 70% of the claims stemmed from two wind and hail events.
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The deal will protect against named storm, quake, severe weather event, fire, volcanic eruption or meteorite impact in Florida.
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The loss for the month was 60% comprising losses from two wind and hail events.
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The carrier shifted retentions up and made use of multi-year contracts.
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The Class B notes upsized by $25mn to $175mn, while the higher-risk Class C zero-coupon notes were not placed.
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The carrier is seeking ex-Florida coverage for named storm, earthquake, severe weather, fire, volcanic eruption or meteorite.
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Allstate disclosed a $211mn catastrophe loss in February based on nine separate events.
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The carrier’s equivalent bond placed last March secured $550mn of limit.
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This takes its ex-Florida cat losses since the start of its reinsurance annual risk period in April above $2bn.
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The market is characterised by rising prices and shrinking deal sizes as investors pick and choose over which bonds to back.
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The carrier had earlier expanded its hoped-for range to $100mn-$125mn.
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The bond has also expanded its range to target up to $125mn.
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The bond will provide the carrier with five years’ coverage for named storms across the US excluding Florida.
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The firm disclosed that ex-cat unfavorable prior year reserve reestimates totaled $875mn, of which $643mn were related to its personal auto unit.
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Allstate CFO Mario Rizzo vowed to continue pushing through auto rate increases.
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The company also said it expects a $408mn reserve charge, including $275mn related to personal auto and $91mn recorded for commercial auto.
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The carrier’s below-FHCF layer is 29% unplaced.
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The losses were caused by 14 events, most notably wind and hail in Texas, the Midwest and Canada.
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The second Sanders Re issuance this year takes total cover raised by the insurer to $837.5mn.
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The figure includes around $17mn of unfavorable reserve re-estimates for prior period events.
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The US nationwide has placed $550mn of nat cat risk into the cat bond market already this year.
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The 2022 reinsurance program will support cat losses exceeding $2.5bn, compared to $2bn in the corresponding period last year.
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Brokers - SectionThe company announced net retained catastrophe losses of $462mn.
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The pricing has settled at the mid-to-top end of guidance across the three tranches.
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This is Allstate’s first entry to the cat bond market in 2022.
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The firm’s 2020 edition cat bond has also lost $3.2mn.
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The firm took $411mn of losses in December, up 940.5% year-on-year, but losses since April are still below the aggregate attachment of its latest Sanders Re deals.
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Spreads on the deal’s two reinsurance layers will be at the upper and lower end of coupons Allstate has offered on the cat bond market.
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Allstate is offering its second Sanders Re catastrophe bond for the year, sized at $350mn across two tranches of notes, in its first ILS transaction with an element of aggregate risk since making a major claim earlier this year.
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The insurer will recoup $986mn from its reinsurers in relation to Q3 cats, of which $689mn stems from Hurricane Ida.
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The carrier also signalled unfavourable reserve developments linked to asbestos and environmental exposures.
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The insurer’s net monthly cat losses reached $876mn.
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Excluding prior-period reserve charges, the Illinois-based company estimated total cat losses at $211mn from 18 events.
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The insurer will recoup $253mn from the Sanders Re aggregate bond, up 30% from the Q1 level forecast, but traditional treaty recoveries have fallen significantly.
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Catastrophe losses for the month fell to $195mn, a sharp drop from the prior year’s $752mn.
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The figure was significantly down on the prior month’s $544mn, and also came in 39% below the year-ago loss tally.
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The deal’s spread settled at 350 basis points, down 12.5% from its initial mid-point target.
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The insurer is seeking occurrence cover on the latest deal after notifying investors of a recent aggregate cat bond claim.
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The monthly tally came in 14% lower than the $632mn reported a year ago.
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Less than a month ago, the insurer said it would recover $184mn of losses from an earlier Sanders Re deal.
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In total, the changes will lift the exhaustion point on its reinsurance by $779mn from last year, although some gaps remain as its cat bond recovery rose to $195mn.
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The insurer offset $1.08bn of Q1 cat losses with reinsurance recoveries and subrogation payouts in total.
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The insurer will also recover from its per-occurrence tower, recouping roughly $700mn of its gross losses from the winter storm.
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Markdowns have wiped more than $220mn off the value of $1.6bn of aggregate cat bonds benefitting major US insurers after the Texas Big Freeze.
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