Sanders Re II Ltd. (Series 2024-3)

Allstate is back in the catastrophe bond market to sponsor what will be the twentieth Sanders issuance for the company and the insurers twenty-second cat bond ever sponsored.

With its latest cat bond transaction, Allstate is using the Sanders Re II Ltd. vehicle for the issuance of two tranches of Series 2024-3 cat bond notes, we are told.

The target is to secure $350 million or more in multi-year and multi-peril catastrophe reinsurance, covering all US states, but excluding Florida. Allstate tends to cover its Florida underwriting entities with separate cat bonds sponsored in May each year.

The notes will be sold to capital market investors and the proceeds used to collateralize a reinsurance agreement between the issuer, Sanders Re II, and Allstate.

That reinsurance agreement will cover the insurer against personal lines property and auto losses from multiple US perils, specifically named storm, earthquake, severe weather, wildfire, volcanic eruption, or meteorite impact events.

The reinsurance protection from this Sanders Re II 2024-3 cat bond will cover Allstate 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, we understand.

A $150 million Class A tranche of notes are scheduled to be on-risk from January 1st 2025 through March 31st 2029 and come with an initial attachment probability of 1.19%, an initial expected loss of 0.88% and are being offered to investors with spread price guidance in a range from 4.25% to 4.75%.

While a $200 million riskier Class B tranche of notes are scheduled to be on-risk from April 1st 2025 through March 31st 2029 and will have an initial attachment probability of 2.12%, an initial expected loss of 1.75% and are being offered to investors with spread price guidance in a range from 5.5% to 6.25%, sources said.

Both of the tranches of notes would attach their coverage at $4.25 billion of losses to Allstate, we understand. 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 span a $950 million layer.

Update 1:

Allstate looks set to upsize its latest catastrophe bond by 43%, with the targeted size of the issuance now increased to $500 million.

The Class A notes are now sized at $200 million, while their spread guidance has been lowered to 4% to 4.25%.

The Class B notes are now sized at $300 million, while their spread guidance has also been lowered to 5.25% to 5.5%.

Update 2:

Allstate has for a second time increased the target size for its latest catastrophe bond, with now $650 million of protection sought from this Sanders. Re II 2024-3 deal.

The Class A notes are now sized at $300 million, while their spread guidance has been fixed at 4%.

The Class B notes are now sized at $350 million, while their spread guidance has also been fixed at 5.25%.