Allstate hit by Texas area wind & hail catastrophe losses in April

Wind and hail losses in the state of Texas drove around 70% of Allstate’s catastrophe event losses for the month of April, as the insurer revealed an estimated $290 million impact from fresh cat events and prior event reserve strengthening.

Of the $290 million of pre-tax catastrophe losses ($229m after tax) reported for April, $259 million were from loss events occurring during the month, while the remainder was from due to reserve strengthening for catastrophes that struck the insurer in prior months.

Seven specific catastrophe loss events were responsible for the April impacts, with two wind and hail losses in Texas and neighbouring states  making up the bulk, at around 70% of the $259 million pre-tax April specific cat losses.

Reinsurance broker Aon recently explained that it saw April severe and convective weather driving more than a billion dollars of impact to economic and insurance or reinsurance interests in the month.

With over 250 tornado touchdowns as well as large hail outbreaks, it’s no surprise that primary insurance groups like Allstate have taken a significant chunk of the losses.

However, Allstate’s share is actually a little less than some analysts seem to have expected, given its market share.

It doesn’t appear that reinsurance will assist the firm at this stage, but added to the $680 million of Q1 2019 catastrophe losses the bill is mounting for the insurer.

Allstate’s Sanders Re Ltd. (Series 2018-1) catastrophe bond, that provides annual aggregate reinsurance protection to the insurer, has just seen its annual risk period start again in April, but the bill for the month appears aligned with modelled expectations for this layer of risk.

Thanks to its most recent cat bond, the $300 million Sanders Re II 2019-1 issuance from March, as well as other adjustments in its reinsurance program, Allstate’s nationwide aggregate protection now triggers at $3.54 billion of qualifying losses to the firm, meaning there is a long way to run this year before the insurers cat bond protection would be deemed at risk.

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