Allstate’s annual aggregate year catastrophe losses reach $3.88bn, pre-tax

US primary insurer Allstate has updated on its catastrophe losses suffered through September and all of the third-quarter, which added to its Q2 tally takes the insurers pre-tax total for the first six months of the annual aggregate year for its catastrophe bonds to $3.88 billion.

Favourable re-estimates of some prior period events means that the $357 million of reported catastrophe losses for September have not made as significant an impact to the running tally of cat losses during the annual aggregate reinsurance risk period for Allstate’s cat bonds.

After August, Allstate’s pre-tax total for catastrophe losses across the first five months of the annual aggregate year for its catastrophe bonds, which begins April 1st, had already risen to around $3.69 billion.

Remember that, Allstate has annual aggregate catastrophe bonds in-force that would attach at $3.4 billion of qualifying losses, with the annual risk period for those cat bonds beginning on April 1st, 2023.

The accumulated pre-tax cat losses Allstate has reported have surpassed that attachment level now, but as we’ve explained before, it’s challenging to know just how the aggregated and qualifying catastrophe loss total sits at any point in time, given the lower down Sanders cat bonds, that attach at $3.4 billion, feature a $50 million event deductible, meaning smaller loss events do not qualify.

But, it’s safe to assume that with the tally of pre-tax aggregate catastrophe losses now at $3.88 billion, the qualifying losses under the terms of the cat bond are rising.

Allstate said today that 17 catastrophe events in September were estimated at $357 million, with around 80% of the losses related to two wind and hail events, partially offset by favorable reserve reestimates for prior events.

Total catastrophe losses for the third quarter reached $1.18 billion, pre-tax.

The second-quarter saw Allstate reporting $2.7 billion of pre-tax catastrophe losses.

As an additional reminder, Allstate is looking for possible solutions that can help it absorb volatility from losses better, including considering buying more reinsurance, likely in aggregate stop-loss form.

Allstate’s aggregate cat bonds are marked down in secondary pricing sheets, given the rising aggregation of losses beneath their triggers, with some in the 70’s and others in the 80’s, data seen by Artemis suggests.