Allstate’s Q2 catastrophe losses reach $952m pre-tax after June

US primary insurance carrier Allstate reported another $195 million of pre-tax catastrophe losses for the month of June, including some loss creep on prior period events, taking its pre-tax total for the second-quarter of the year to around $952 million.

After May, Allstate’s Q2 catastrophe losses had reached $757 million pre-tax.

This came on the heels of a very expensive first quarter of catastrophe losses, that caused Allstate to make some 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.

But, Allstate’s annual risk period for its aggregate reinsurance from the Sanders Re cat bonds, resets at the end of March. Which means the April and May tallies begin the erosion of the deductible sitting beneath that layer of reinsurance protection again.

However, a more benign May and June have helped to reduce the run-rate somewhat for Allstate, so have likely also reduced the run-rate of aggregated losses that could qualify to erode deductibles beneath its Sanders Re aggregate cat bond backed reinsurance.

For June 2021, Allstate has reported $195 million of pre-tax catastrophe losses, or $154 million after tax is accounted for.

Allstate said that catastrophe losses that struck in June consisted of 11 events, at an estimated cost of $178 million.

Three large wind, hail and rain events, primarily impacting the Midwest United States, made up roughly 70% of June’s estimated catastrophe losses for Allstate.

The additional losses, $17 million pre-tax, came from unfavorable prior period reserve estimates, Allstate said.

Recall that the prior period reserve additions reported by Allstate in both May and June may affect the loss picture for its Sanders Re cat bonds, if they come from events prior to the end of March and that have qualified under the terms of the loss-affected cat bonds reinsurance arrangement.

Any loss creep on those Q1 catastrophe events booked by Allstate has the potential to raise the ultimate loss related to the catastrophe bond backed reinsurance.