Sanders Re II Ltd. (Series 2025-2)

Allstate has returned to the catastrophe bond market in search of $150 million or more in multi-peril reinsurance protection focused on Florida through a new Sanders Re II Ltd. (Series 2025-2) catastrophe bond issuance.

For its latest Florida-focused cat bond transaction, Allstate is again using the Sanders Re II Ltd. vehicle for the issuance of a single Class A tranche of Series 2025-2 cat bond notes, we understand.

The targeted $150 million of Class A Series 2025-1 notes Sanders Re II Ltd. will issue, will be sold to capital market cat bond investors and the proceeds used to collateralize reinsurance agreements between the issuer and Allstate’s Florida underwriting entities.

As with its previous Florida cat bonds, we understand the beneficiaries of the coverage will be the firms’ Florida-focused underwriting subsidiaries Castle Key Insurance, Castle Key Indemnity, as well as the National General and Northlight brand entities.

We understand the new Sanders Re II 2025-2 catastrophe bond will provide those entities with a three year source of fully-collateralized reinsurance on a cascading indemnity and per-occurrence trigger basis.

The covered perils will be the typical Florida named storm, earthquake, severe weather, wildfire, volcanic eruption, and meteorite impact that Allstate has always covered with its Florida focused cat bonds, we are told.

The $150 million of Series 2025-2 Class A principal-at-risk notes issued by Sanders Re II Ltd. would attach their coverage above $95.5 million of losses, participating in a $300 million layer above that of the Florida reinsurance tower, which gives them room to upsize the deal should investor appetite prove strong.

It’s important to note that there could be inuring reinsurance to these notes, perhaps its FHCF coverage, so the effective attachment point may be higher, which the risk metrics associated with the notes and their cascading coverage nature suggest.

The $150 million of Series 2025-2 Class A notes come with an initial attachment probability of 2.77% and an initial base expected loss of 1.74%, while they are being offered with price guidance in a range from 7% to 7.75%, sources said.

Update 1:

Allstate eventually secured the targeted $150 million of Florida focused reinsurance protection from the capital markets with this new Sanders Re II Ltd. Series 2025-2 catastrophe bond.

The $150 million of Series 2025-2 Class A notes were priced to pay investors a risk interest spread of 7%, so at the low-end of the initial guidance range.