We’re told that US primary insurer Allstate has for a second time increased the target size for its new Sanders Re II Ltd. (Series 2025-1) catastrophe bond issuance, with a further increase to one of the tranches of notes and the overall deal now targeting $750 million in collateralized catastrophe reinsurance for the company.
Allstate returned to the cat bond market last month with an initial $300 million target for its latest Sanders Re deal, seeking multi-peril and multi-year per-occurrence catastrophe reinsurance protection.This new catastrophe bond will become the twenty-first in the Sanders Re series of deals sponsored by Allstate and the firm’s twenty-third cat bond that we’ve tracked and analysed from the insurance company.
Read about every cat bond sponsored by Allstate in our Deal Directory.
As we later reported in an update on this deal, we had learned that this new Sanders Re 2025-1 catastrophe bond was set to become one of the largest from Allstate, as the target size was more than doubled to $650 million while the price guidance was lowered for all four tranches of notes.
Now, we’re told the target size has been increased again, with $750 million of protection now being sought by Allstate from this new catastrophe bond sponsorship. While the pricing has remained at the lower levels from the previous update for all four tranches.
At $750 million in size, this new Sanders Re II 2025-1 cat bond would become the joint-largest ever sponsored by Allstate, the same size as a 2014-1 issuance it sponsored as its second under the Sanders Re name.
The further increase in size has come from just one of the tranches of notes on offer in this latest cat bond from Allstate, a Class B-2 tranche of notes that will have a five year term. So it seems Allstate is looking to maximise the opportunity to lock-in long-term reinsurance from the capital markets with this new deal.
This new Sanders Re II 2025-1 cat bond will provide Allstate with indemnity triggered, per-occurrence reinsurance for personal lines property and auto losses from multiple US perils, specifically named storm, earthquake, severe weather, wildfire, volcanic eruption, or meteorite impact events, on a per-occurrence and indemnity trigger basis, with two tranches of notes in-force for three years, the other two seeking longer five-year protection for the insurer.
The Class A-1 tranche of three-year notes remain $175 million in size. With their initial base expected loss of 0.6221%, their pricing remains fixed at the updated 4%.
The Class A-2 tranche of five-year notes also remain $175 million in size. They come with an initial base expected loss of 0.6221% and since the first update their pricing remains at 4.25%.
The Class B-1 tranche of three-year notes remain $100 million in size. These have an initial base expected loss of 0.8771% and their pricing also remains at the reduced 4.5%.
The final Class B-2 tranche of five-year notes are the ones that have upsized, from $200 million at the last update to now target $300 million of protection for Allstate. These come with an initial base expected loss of 0.8771%, and their pricing remains fixed at the low-end of 4.75%, we are told.
Allstate looks set to secure its joint-largest slice of reinsurance protection from the catastrophe bond market with this new issuance, while the pricing remains at the reduced levels indicating strong investor appetite and execution for the sponsor.
You can read all about this Sanders Re II Ltd. (Series 2025-1) from Allstate and every other catastrophe bond issuance in the extensive Artemis Deal Directory.
