Allstate’s aggregate reinsurance year starts with $872m of cat losses

US primary insurance giant Allstate has reported a relatively heavy catastrophe loss burden for April 2023, with $872 million of losses recorded during what is the first month of the annual aggregate term for many of its Sanders catastrophe bonds and the reinsurance they provide.

Allstate’s annual aggregate reinsurance comes from its Sanders Re catastrophe bond program, with those annual risk periods all beginning on April 1st and running to March 31st.

There remains some uncertainty over how exposed the aggregate Sanders cat bonds could be to the previous annual risk periods catastrophe losses, we’ve yet to hear anything on that.

But, for the new risk period that has just begun on April 1st, the initial loss contribution may be quite significant, with $872 million of catastrophe losses reported by Allstate for the month, from across 12 events.

Around 60% of the April catastrophe losses came from two wind and hail loss events, Allstate said today.

How those $872 million of April 2023 catastrophe losses qualify under the terms of the aggregate cat bond deals will depend on whether the notes have a franchise deductible, or a per-event deductible in place.

It’s always challenging to understand just how many of the 12 events reported by Allstate would have qualified, but it seems with two particularly large loss events reported, those at least would aggregate towards the cat bond’s annual risk period.

Allstate also reported some favourable development on prior period catastrophe events, which meant its reported estimated catastrophe losses for the month of April were $799 million, or $631 million after-tax.

But prior period reserve improvement cannot reduce the qualifying losses under the new risk period, so it will be a portion of the $872 million that counts under the cat bonds terms.

Read more about Allstate’s reinsurance towers in our recent article.

The insurer is also in the catastrophe bond market right now, seeking Florida specific reinsurance protection.