Allstate secures $1.2bn reinsurance with new Sanders Re cat bonds, its largest placement ever

Allstate has now successfully priced its new catastrophe bonds to provide the largest amount of reinsurance limit it has ever secured in a single visit to the market, with $1.2 billion of multi-peril reinsurance confirmed from the dual issuances of Sanders Re IV Ltd. (Series 2026-1A) and Sanders Re III Ltd. (Series 2026-1B) cat bond series, this publication can report.

Allstate is a particularly long-standing sponsor in the catastrophe bond market, having brought its first cat bonds to market back in 2007.

Since then, the insurer has brought 26 series of notes in total to catastrophe bond investors, 24 of which come under the Sanders Re naming convention.

However, in all of those visits to the cat bond market since 2007, Allstate has never secured more than $950 million of reinsurance limit in a single month and that was across two staggered visits rather than one placement.

In terms of single visits, marketed to the insurance-linked securities (ILS) investor base in one go, the previous highest amount of reinsurance limit secured from the cat bond market by Allstate was $750 million. Until now, that is.

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

When Allstate came back to the catastrophe bond market for these dual issuances in late January, the insurer’s initial goal was to secure $500 million of fully-collateralized, multi-peril and multi-year occurrence (ex-Florida) reinsurance limit from the capital markets across the two series of notes.

In our first update on these deals we reported that their target sizes were both lifted from the initial $250 million per-series, to between $450 million and $500 million per-series of notes, so a combined target for between $900 million and $1 billion of catastrophe reinsurance limit, while the price guidance was adjusted within the initially offered ranges.

Then, in a second update we reported that Allstate had raised its target further, with $600 million of reinsurance sought from each series of notes, for a combined target to secure $1.2 billion of reinsurance from the capital markets. The price guidance remained at the adjusted levels, within the initial ranges.

Now, sources have told us that Allstate has successfully priced all four series of catastrophe bond notes across the two series being issued, securing the upsized target of $1.2 billion of reinsurance limit and so making this the largest amount of protection the insurer has ever sources from the cat bond market in a single visit.

It’s especially notable when a long-standing sponsor like Allstate achieves a new high, in terms of risk capital secured from the cat bond market after all these years.

It reflects the benefits and efficiency of capital markets backed, multi-year reinsurance protection and the competitive pricing that can be achieved in the cat bond market at this time.

In this case, Allstate has also locked-in one of the largest amounts of five-year reinsurance protection from the cat bond market ever, as two of the tranches to be issued will run for that duration, the other two providing four year reinsurance cover.

Again, that’s notable and serves to demonstrate to large re/insurers that the catastrophe bond market can provide them with long-term certainty within their reinsurance arrangements, locking in coverage for relatively long durations, as to this day the majority of reinsurance remains a one-year purchase.

So, with the notes all priced, it is now confirmed that Allstate will add $1.2 billion of new catastrophe bond backed reinsurance to its tower from April 1st this year.

Allstate already has $3.15 billion of unimpaired and not extended cat bonds outstanding at this time, occupying the top spot in our Artemis cat bond sponsor leaderboard.

With $550 million of nationwide ex-Florida cat bonds (like these new issues) set to mature in April, at that stage Allstate will jump to $3.8 billion of cat bond risk capital outstanding, one of the highest levels ever seen for a single sponsor and keeping it firmly at the top of the leaderboard.

Allstate also has $300 million of Florida-specific cat bond issues set to mature in June, but the insurer does tend to return to renew those later in the spring, so those could get replaced. Either way, Allstate is destined to remain at the top or in the upper-positions of our catastrophe bond sponsor leaderboard for some time it seems.

Back to the new issuances, where all details are now confirmed for the $1.2 billion of notes after their successful pricing.

All four tranches of notes will provide Allstate with per-occurrence and indemnity triggered catastrophe reinsurance protection across all US states except for Florida, covering personal lines property and auto losses from multiple US perils. Specifically the coverage is for losses from named storm, earthquake, severe weather, wildfire, volcanic eruption, or meteorite impact events, the same perils as all of Allstate’s nationwide ex-Florida cat bond deals.

Allstate has secured $550 million of four-year reinsurance and $650 million of five-year reinsurance protection from these new cat bonds.

Under the Sanders Re IV Ltd. vehicle, two tranches of Series 2026-1A notes are set to be issued, one providing four-year and one five-year coverage. Both have the the same initial base expected loss of 0.6851% and were initially offered with price guidance for a risk interest spread of between 3.25% and 4.25%

The Series 2026-1A Class A-1 notes (four year term) have been finalised at $275 million in size and will pay investors an initial risk interest spread of 3.5%.

The Series 2026-1A Class A-2 notes (five year term) have been finalised at $325 million in size and will also pay investors an initial risk interest spread of 3.5%.

Under the Sanders Re III Ltd. vehicle, two tranches of Series 2026-1B notes are being offered, again with one providing four-year and one five-year coverage. Both have the the same initial base expected loss of 1.8874%, so are the riskier series and were initially offered with price guidance for a risk interest spread of between 4.5% and 5.5%

The Series 2026-1B Class B-1 notes (four year term) have been finalised at $275 million in size and will pay investors an initial risk interest spread of 5%.

The Series 2026-1B Class B-2 notes (five year term) have been finalised at $325 million in size and will also pay investors an initial risk interest spread of 5%.

Clearly Allstate found catastrophe bond market pricing attractive this year and the size of its new issues, as well as their duration that layers long-term funding through its reinsurance tower, should send a strong signal to other potential cat bond sponsors that the market is open for business and continues to fire on all cylinders.

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.