US primary insurer Allstate has now successfully priced its latest catastrophe bond transaction, securing the upsized 150% target of $750 million of collateralized multi-peril and multi-year catastrophe reinsurance protection from the Sanders Re II Ltd. (Series 2025-1) issuance, which marks the company’s joint-largest cat bond sponsorship ever.
Allstate returned to the catastrophe bond market in February 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 cat bond now becomes the twenty-first in the Sanders Re series of deals sponsored by Allstate, and also marks 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.
In our first 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 the insurer, as the target size was more than doubled to $650 million while the price guidance was lowered for all four tranches of notes.
Then, in our last update, we learned that the target size had been increased again, with $750 million of protection being sought by Allstate from this new catastrophe bond sponsorship, while the pricing remained at the lower levels from the previous update for all four tranches.
Now, sources have told us that the 150% upsized target of $750 million has been secured, with the notes priced at the bottom of initial guidance.
At $750 million in size, this new Sanders Re II 2025-1 catastrophe bond becomes 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.
This new Sanders Re II 2025-1 catastrophe bond will provide Allstate with 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, and the other two for five-years.
The $175 million Class A-1 tranche of three-year notes have an initial base expected loss of 0.6221%. The notes were first offered to cat bond investors with spread guidance in a range from 4% to 4.25%, which has since been fixed at 4%.
The Class A-2 tranche of five-year notes are also $175 million in size. They come with an initial base expected loss of 0.6221% and had first been offered to cat bond investors with price guidance in a range from 4.25% to 4.5%, which later fell to 4.25%, so priced at the bottom-end of initial guidance.
The $100 million Class B-1 tranche of three-year notes have an initial base expected loss of 0.8771% and had been offered with price guidance in a range from 4.5% to 4.75%, which later fell and has been priced at 4.5%.
The final Class B-2 tranche of five-year notes, which were originally $200 million in size, were then lifted to a targeted $300 million of protection for Allstate in our last update. Now, sources have informed us that the notes have been priced at $300 million.
These notes come with an initial base expected loss of 0.8771%, and in our last update on this deal, we revealed that their pricing had remained fixed at the low-end of 4.75%, which is where they now priced.
This is a strong result for Allstate as this latest cat bond builds on the company’s previous success across the market.
Allstate has maximised its opportunity to increase its reinsurance protection from the capital markets with this Sanders Re 2025-1 deal, capitalising on the strong demand being seen from the cat investor base, while also securing its joint-largest cat bond sponsorship ever at attractive pricing.
As a reminder, 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.
