US primary insurance carrier Allstate has now settled for $100 million of catastrophe reinsurance protection from its latest cat bond, as the Sanders Re III Ltd. (Series 2022-3) issuance has failed to upsize, while the notes were priced at the elevated price level, roughly 14% above the mid-point of guidance.
Allstate’s latest catastrophe bond was launched with a $100 million target earlier this month, but the insurer then increased its appetite a little, as the target size had been lifted to up to $125 million.
In the end the company has settled for the initial $100 million target, we’re told, with the Sanders Re III 2022-3 catastrophe bond notes now set to provide Allstate with roughly four years of indemnity and per-occurrence based multi-peril US catastrophe reinsurance.
The US nationwide, excluding Florida, reinsurance coverage will protect Allstate against losses from US named storms, earthquakes, severe weather events, wildfires, volcanic eruptions and meteorite impacts, across its personal lines property and auto insurance businesses, including from affiliates.
So, Sanders Re III Ltd will issue a single $100 million tranche of Series 2022-3 Class A notes, which have an initial expected loss of 0.6238% at the base case.
At first, these notes were offered with price guidance in a range from 5.25% to 5.75%, but as we explained earlier this week the price guidance was raised and fixed at an elevated 6.25%.
Which, now priced, represents a roughly 14% increase in the coupon, when compared to the initial marketed mid-point of guidance.
Now finalised, the multiple at market paid to investors in these notes will be 10 times the initial base expected loss, which is particularly high, even for post-Ian cat bonds.
As a reminder, Allstate is the first sponsor of a new cat bond to come to market since hurricane Ian that may also make recoveries off its outstanding cat bond backed reinsurance arrangements due to that storm.