Allstate, the US primary insurance giant, has added more catastrophe bond protection, by successfully securing an additional $30 million of multi-peril reinsurance which we believe to be for Florida from a privately placed zero-coupon Sanders Re III Ltd. (Series 2026-3) notes issuance, Artemis can report.
The last time we saw this from the insurer was in 2024, when it secured $74.5 of multi-peril Florida focused reinsurance from a zero-coupon, privately placed Sanders Re II Ltd. (Series 2024-2) deal that also provided it with one-year of protection.
Given the timing of this new Sanders Re III Series 2026-3 cat bond placement for Allstate, we assume the rationale is similar and it is likely that the peril region is the same.
Effectively filling more of its Florida reinsurance tower with the help of catastrophe bond investors, at a lower-layer of the reinsurance program than was seen with the recent placement of a $200 million Sanders Re III Ltd. (Series 2026-2) Florida focused 144A cat bond from the company.
Having experienced strong price execution in the catastrophe bond market with that coupon bearing note issuance in May, we suspect Allstate recognised an opportunity to cede additional risk from its Florida tower to cat bond investors, at a lower-layer given the one year coverage and zero-coupon nature of this new tranche of notes.
Details with this new Series 2026-3 cat bond are more limited though, given the privately placed nature of this latest catastrophe bond issuance sponsored by Allstate.
We are told these notes were less broadly marketed and offered to a relatively small group of cat bond fund investors.
Sanders Re III Ltd. has issued a $30 million tranche of Series 2026-3 Class A notes that have been sold to investors and the proceeds used to collateralize an underlying reinsurance agreement with Allstate.
We cannot be 100% certain of the covered perils and region, but given the timing as this 2026-3 tranche was priced around the same time as the 2026-2 Florida notes and settled on June 1st (aligned with its Florida reinsurance renewal), we make the assumption the $30 million of reinsurance will protect Allstate lower-down in its Florida reinsurance tower, against losses from multiple perils affecting its policies in the state.
In addition, we assume the coverage from the $30 million of Sanders Re III Series 2026-3 Class A cat bond notes will be indemnity trigger based and per-occurrence in nature, given that is how Allstate’s entire Florida reinsurance tower is structured (the insurer’s aggregate coverage has always been nationwide).
The $30 million of Series 2026-3 Class A principal-at-risk notes issued by Sanders Re III Ltd. are structured as zero-coupon notes and have been issued as Section 4(a)2 securities, we understand, which Allstate has typically opted to do where the notes come with a higher level of risk, or provide a shorter coverage term.
In this case, the $30 million of notes cover Allstate against losses for a one-year term, with maturity slated for June 7th 2027, we have learned.
The only other detail we have sourced on this new $30 million zero-coupon cat bond sponsorship from Allstate, is that the notes were priced at 65% of par value.
That implies a relatively high rate-on-line for the reinsurance protection, a rough equivalent might be thought of as around 35%, which implies these notes will occupy a lower-layer of Allstate’s Florida reinsurance tower for the year ahead, as has been seen when the insurer has sponsored zero coupon notes at the mid-year previously.
We have made the assumption that Allstate has used its typical service providers to sponsor this cat bond, in terms of structuring agents, bookrunners and risk modelling, which you can see in the Deal Directory entry.
With this additional $30 million cat bond sponsorship, it seems Allstate has now secured $230 million of catastrophe bond backed reinsurance for its Florida reinsurance tower at the mid-year renewal, adding to the recent $200 million 144A placement.
This latest cat bond sponsorship takes the number of Sanders Re deals we’ve seen from Allstate to twenty-six, while it makes now twenty-eight cat bonds in total that we’ve tracked and analysed from the insurer.
You can read all about this Sanders Re III Ltd. (Series 2026-3) from Allstate and every other catastrophe bond issuance in the extensive Artemis Deal Directory.
