US primary insurance carrier Allstate has reported $544 million of net catastrophe losses, largely caused by April’s severe US convective weather and hail storms, as well as some loss creep on previous events.
The insurer said that the $544 million of catastrophe losses reduces to $430 million after-tax.
Five catastrophe events hit Allstate during the month of April 2021.
The estimated cost from across all five catastrophe events is $490 million, but Allstate noted that one large hail event, primarily impacting Texas and Oklahoma, accounted for roughly 60% of the total hit in April.
That event must have been the night of large hail that impacted Norman in Oklahoma, towards the south of Oklahoma City, as well as communities around Fort Worth and San Antonio in Texas.
We previously explained that these hail storms could have caused over $1 billion of insurance and reinsurance market losses and with Allstate now reporting almost half that amount alone, it seems almost certain that the hail on April 28th will surpass the billion dollar loss level.
Allstate has experienced elevated catastrophe losses this year, largely due to the winter storms and Texas freeze event.
That caused the insurer to make reinsurance recoveries under its Sanders Re catastrophe bonds, with those losses then increasing after further March losses eroded the cat bond backed aggregate reinsurance cover even more.
Allstate’s annual risk period, for its aggregate reinsurance from the Sanders Re cat bonds, resets at the end of March.
So the fresh $490 million of April 2021 catastrophe losses will not add to the cat bond losses, rather they begin the aggregation for the next risk period.
However, Allstate has also reported this month that the remaining $54 million of catastrophe losses it is booking for April, are actually due to unfavorable prior period reserve estimates, so losses creeping higher on cat events from previous months.
It’s not clear from Allstate’s reporting whether those prior period reserve additions could affect the loss picture for its Sanders Re cat bonds at this time.
As a reminder, because of the recent catastrophe losses and resulting reinsurance recoveries, Allstate ended up with a gap in its tower that it is now looking to fill with another Sanders Re catastrophe bond issuance.