US primary insurance giant Allstate seeking to expand its new catastrophe bond issuance, with the target for the Sanders Re II Ltd. (Series 2021-1) transaction now lifted to $250 million, we understand.
Allstate is looking to fill a gap in its per-occurrence reinsurance tower before the wind season begins, after loss activity eroded some of its protection, leading to this latest cat bond issuance that launched just over ten days ago.
As we understand it, Allstate is looking to secure around $400 million of reinsurance to fill the gaps in its per-occurrence tower created after loss activity and recoveries, so this catastrophe bond issuance appears to be part of that, being an occurrence only deal which is a little unusual for the sponsor.
All of Allstate’s outstanding cat bonds provide both occurrence and aggregate reinsurance protection at the moment, so with this new issue being occurrence only, it seems designed to support filling the gap layer in its tower.
When the deal was launched Allstate was seeking $200 million of reinsurance protection from this Sanders Re II 2021-1 catastrophe bond.
Now, we’re told the target has been lifted to $250 million, while at the same time the price guidance for the notes has been lowered to below the initial marketed range, we understand.
The now $250 million of notes will provide Allstate with a a roughly four-year source of collateralized reinsurance protection, on an indemnity and per-occurrence basis, covering losses from US named storms, earthquakes, severe weather, wildfires and other perils, but not including Florida.
The covered layer stretches from an attachment point of $3.75 billion and exhausts at $4.15 billion of losses, with the notes having an initial expected loss of 1.1475%.
The notes were first offered to cat bond investors with spread guidance in a range from 3.75% to 4.25%, but we’re now told this has dropped to 3.5% to 3.75%, so below the initial range and representing another cat bond that looks destined for efficient execution to provide attractively priced reinsurance protection to a sponsor.