Allstate returns with $500m target across Sanders Re III and Sanders Re IV cat bond issuances

US primary insurer Allstate is back in the catastrophe bond market seeking $500 million of fully-collateralized multi-peril per-occurrence catastrophe reinsurance protection through dual issuances of Sanders Re IV Ltd. (Series 2026-1A) and Sanders Re III Ltd. (Series 2026-1B) cat bond series.

Each year Allstate tends to sponsor a number of catastrophe bonds to augment its traditional reinsurance towers, with some providing coverage across the US excluding Florida, while others cover just its Florida business.

In the case of these two issuances, from two separate special purpose insurers, Allstate is seeking the former, broad multi-peril catastrophe reinsurance across the United States except Florida.

For Allstate, these latest catastrophe bonds will take the number of Sanders Re deals we’ve seen to twenty-four, while it makes now twenty-six cat bonds in total that we’ve tracked and analysed from the company.

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

Using the more recently established Sanders Re IV Ltd. and an older vehicle Sanders Re III Ltd., Allstate is targeting an offering with an initial size of $500 million across four tranches of notes, although individual tranche sizes are not yet known, we hear.

All four 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 III Ltd. and Sanders Re IV Ltd. are 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, two tranches of the cat bond notes on offer seek four year protection for Allstate, while the other two on offer 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%.

Under the Sanders Re III Ltd. vehicle, two tranches of Series 2026-1B notes are being offered, sources said.

A tranche of Series 2026-1B Class B-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 B-1 notes an initial attachment probability of 2.27%, an initial base expected loss of 1.8874% and they are being offered with price guidance for a risk interest spread of between 4.5% and 5.5%.

A tranche of Series 2026-1B Class B-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 B-2 notes the same initial attachment probability of 2.27%, the same initial base expected loss of 1.8874% and they are also being offered with price guidance for a risk interest spread of between 4.5% and 5.5%.

You will notice the similarities, in terms of the layers of the reinsurance tower occupied and the structure of the duration of covers. But you will also note the differences in risk metrics, attachment probability and expected losses, which at this time we do not have access to information to explain.

It’s possible these cat bonds are designed to inure to other layers of reinsurance in the tower, details of which we are not privy to, or even to each other as that could explain the differences in risk associated with what otherwise look like very similar catastrophe bond tranches.

Whatever the underlying structure is that applies to each of the tranches of notes on offer, these new catastrophe bonds from two special purpose issuers are set to provide Allstate with broad catastrophe reinsurance protection for its nationwide tower and it will be interesting to see how sizes may change, given the significantly wide layers each tranche is set to cover.

We’ve listed these in separate entries in our Deal Directory, given the two issuance vehicles used.

You can read all about the Sanders Re IV Ltd. (Series 2026-1A) and Sanders Re III Ltd. (Series 2026-1B) cat bonds from Allstate and every other catastrophe bond issuance in the extensive Artemis Deal Directory.