December 2, 2023

Allstate, a large major US insurer, reported an estimated catastrophe loss of $893 million in May, slightly higher than the $872 million it reported in April.

allstate logo signPost-merger, Allstate has recorded catastrophe losses of nearly $1.8 billion in the first two months of the combined annual maturity of some of its Saunders cat bonds and the reinsurance provided by these transactions.

The annual risk period starts April 1 and runs until March 31.

Like April, May’s losses included 12 incidents with an estimated $893 million in damages, 70 percent of which was related to two wind and hail events, partially offset by favorable reestimates from earlier events.

Including the favorable development of previous catastrophe events, Allstate’s catastrophe loss load for May was $885 million after tax or $699 million.

However, as we noted for the April total, the front-end provisioning improvement will not reduce qualifying losses during the new risk period, so it will be part of the $893 million calculated under the terms of catastrophe bonds, or nearly $1.8 billion in April The dollar and the plum merge.

With April and May estimated to be close to $900 million each year, the initial overall catastrophe loss for the new annual risk period is close to $1.8 billion after just two months, which could be huge. Although, out of the 24 incidents reported by the insurance company, it is always difficult to judge how many qualify.

For the current annual exposure period beginning April 1, Allstate has catastrophe bonds in effect that carry $3.4 billion in qualifying losses.

Those now have a $50 million event deductible, making it harder to judge how those reported catastrophe losses will translate into qualifying losses under the terms of Sanders’ comprehensive catastrophe bond. But, to be sure, this is the beginning of a costly period of total risk for Allstate.

In May, Allstate completed its latest placement of catastrophe bonds under Sanders Re SPI, the $370 million Sanders Re III Ltd. (Series 2023-2) transaction to provide multi-peril reinsurance to its subsidiary operating in Florida Protect.

You can read about Allstate’s reinsurance tower in our recent article.

Also read yesterday’s content: Allstate’s Florida catastrophe bonds facing Hurricane Ian losses have been extended to maturity.

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