Allstate aims to upsize Sanders Re II 2024-3 cat bond 43% to $500m

US primary insurer Allstate is now aiming to upsize its latest catastrophe bond by as much as 43%, as its target has increased to $500 million in multi-peril catastrophe reinsurance protection from the capital markets through its latest Sanders Re II Ltd. (Series 2024-3) issuance, Artemis can report.

This new catastrophe bond will be the twentieth in the Sanders Re series of deals from Allstate and the twenty-second cat bond that we’ve tracked and analysed from the insurer since it first tapped the insurance-linked securities (ILS) market back in 2007.

Read about every cat bond sponsored by Allstate in our Deal Directory.

Allstate returned to the cat bond market in November, with an initial target to secure $350 million in multi-peril reinsurance protection covering all US states except for Florida from this Sanders Re II 2024-3 transaction.

We’re now told by sources that the target size has risen, for each of the two tranches of notes on offer and that Allstate is now aiming to secure $500 million of protection from this new cat bond issuance, making it one of the larger deals the insurer has sponsored.

At the same time, both tranches of notes now look set to price at the bottom of initial guidance or lower, with new spread ranges being offered to cat bond investors.

The reinsurance agreement under this cat bond will cover Allstate for certain losses from US (ex-Florida) named storm, earthquake, severe weather, wildfire, volcanic eruption, or meteorite impact events, 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.

The Class A tranche of notes were originally $150 million, but are now pitched at an upsized $200 million, we are told. The Class A notes will be on-risk from January 1st 2025 through March 31st 2029 and they come with an initial expected loss of 0.88% and were first offered to investors with spread price guidance in a range from 4.25% to 4.75%. That price guidance has now dropped, with a new tighter range of 4% to 4.25% offered to investors.

The riskier Class B tranche of note offering has increased from $200 million to now $300 million in size, we understand. The Class B notes will be on-risk from April 1st 2025 through March 31st 2029, have an initial expected loss of 1.75% and were first offered to investors with spread price guidance in a range from 5.5% to 6.25%. That price guidance has also fallen, with a new range of 5.25% to 5.5% now being offered.

Both of the tranches will attach their coverage at $4.25 billion of losses to Allstate, 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 only span a $950 million layer.

So Allstate is set to be another catastrophe bond sponsor to benefit from strong investor demand in 2024 and this upsizing takes the projected annual total for cat bond issuance in 2024 including the pipeline of deals yet to complete, now even higher into record-setting territory.

You can read all about this Sanders Re II Ltd. (Series 2024-3) from Allstate and every other catastrophe bond issuance in the extensive Artemis Deal Directory.