US primary insurance giant Allstate has pre-announced its catastrophe losses for the second-quarter of the year, with severe weather loss activity in June helping to drive the total for Q2 to $1.1 billion, before tax.
A month ago, we reported that Allstate had revealed pre-tax catastrophe losses for April and May totalling $752 million, as its aggregation of catastrophe losses began relatively briskly in the last quarter.
As we wrote then, Allstate’s risk period for its in-force aggregate reinsurance supporting catastrophe bonds begins on April 1st each year.
Allstate’s aggregate nationwide catastrophe reinsurance arrangements, which is all sourced from a range of its Sanders catastrophe bond issues, attaches at just over $2.7 billion of losses.
The insurer reported that June 2022 has added a further $356 million of estimated catastrophe losses, pre-tax, or $281 million, after-tax, to its annual aggregate year total.
Those $356 million of pre-tax catastrophe losses came from 10 loss events, which Allstate said were primarily wind and hail in the Midwest, and drove an estimated $315 million of the pre-tax total.
The rest of the June 2022 catastrophe loss total came from unfavorable development on reserves for prior period events, Allstate said.
As a result, the second-quarter total came to $1.1 billion, pre-tax, for Allstate, which was right around the middle of a range of equity analyst estimates, above for some, below for others.
So this seems a reasonable start to the aggregate year for Allstate’s catastrophe losses, especially when the second-quarter is so known for convective storm loss events.
After recent new issues, Allstate has aggregate catastrophe bonds attaching lower down, at $2.705 billion, that have event deductibles in place, as well as aggregate cat bonds sitting higher up in its reinsurance tower which have older franchise deductible arrangements.
Because of these two different aggregate structures, it means qualifying losses will aggregate a little differently for each deductible, making it a bit more challenging to track development of Allstate’s losses over the year.