Sanders Re IV Ltd. (Series 2026-1A)

Allstate has returned to the catastrophe bond market seeking additional broad multi-peril catastrophe reinsurance to add to its Nationwide reinsurance tower.

The insurer is in the market with two issuance vehicles offering notes at the same time, this Sanders Re IV Ltd. (Series 2026-1A) cat bond transaction and a Sanders Re III Ltd. (Series 2026-1B) cat bond as well. We’ve separated them into two entries in our Deal Directory, but details are similar so there is some repetition here.

Using a more recently established Sanders Re IV Ltd., Allstate is targeting an offering with an initial size of $250 million across two tranches of notes, although individual tranche sizes are not yet known, we hear.

Each of the tranches of notes are designed to provide per-occurrence and indemnity triggered catastrophe reinsurance protection for Allstate, across all US states except for Florida, to further build out its reinsurance tower with the support of the catastrophe bond market, we understand from sources.

The notes Sanders Re IV Ltd. is offering will be sold to capital market cat bond investors and the proceeds will be used to collateralize reinsurance agreements between the issuers and Allstate.

Those 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 same perils as its typical nationwide ex-Florida cat bond deals.

Aligned with its traditional reinsurance tower to come on-risk from April 1st, one tranche of the cat bond notes on offer seek four year protection for Allstate, while the other seek five years of coverage, we are told.

These new catastrophe bonds will add to significant cat bond capacity supporting Allstate’s nationwide US reinsurance tower. You can view details of that tower at the last April 1st renewal here.

Under the Sanders Re IV Ltd. vehicle, two tranches of Series 2026-1A notes are being offered, we understand.

A tranche of Series 2026-1A Class A-1 notes (four year term) will occupy a layer of the reinsurance tower attaching at $4.75 billion and sharing in $1.25 billion of losses in excess of that.

This gives the Class A-1 notes an initial attachment probability of 0.78%, an initial base expected loss of 0.6851% and they are being offered with price guidance for a risk interest spread of between 3.25% and 4.25%.

A tranche of Series 2026-1A Class A-2 notes (five year term) will occupy a layer of the reinsurance tower attaching at $4.75 billion, but sharing in only $1 billion of losses in excess of that.

Which gives the Class A-2 notes the same initial attachment probability of 0.78%, the same initial base expected loss of 0.6851% and they are also being offered with price guidance for a risk interest spread of between 3.25% and 4.25%.