U.S. primary insurance giant Allstate has successfully increased the size of its new catastrophe bond transaction by one-third, with the Sanders Re II Ltd. (Series 2020-2) cat bond deal now featuring $200 million of notes.
The successful upsizing of the issuance came after pricing guidance was lifted to the top-end of initial guidance, which is where it settled.
Allstate had returned to the catastrophe bond market in early May with a transaction seeking Florida specific multi-peril reinsurance for its Castle Key subsidiaries operating in the state.
The Sanders Re II Ltd. special purpose insurer was targeting the issuance of a single $150 million Series 2020-2 Class A tranche of notes.
Now, the issuance has grown by one-third to $200 million, as capital market investors strongly supported Allstate’s reinsurance needs.
As a result, the Sanders Re II 2020-1 catastrophe bond will now provide Allstate’s Florida subsidiaries with $200 million of reinsurance protection across a three-year term, on an indemnity trigger, per-occurrence basis and structured to cascade as other reinsurance layers beneath are eroded.
The reinsurance will protect Allstate against losses from the multiple perils of named storm, earthquake, severe thunderstorm, volcanic eruption, meteorite impact and wildfire impacting the state of Florida across subject business of homeowners, condo, rental and boat owners personal lines property insurance policies underwritten by Allstate’s two Castle Key insurers.
The $200 million of notes have an initial expected loss of 0.61% and pricing has been fixed at the top-end of guidance, at 5.5%.
Allstate has continued to demonstrate its appetite for layering catastrophe bonds within its reinsurance tower, having expanded its nationwide tower with the help of a previous Sanders Re II cat bond issuance already this year.
Now, the insurer has also shown its appetite for continued catastrophe bond and capital markets reinsurance support within its Florida specific reinsurance tower as well, with this upsized issuance set to fully replace a maturing 2017 issuance.