US primary insurer Allstate has returned to the catastrophe bond market in search of $300 million or more in multi-peril per-occurrence catastrophe reinsurance protection from the capital markets with a issuance, Artemis can report.For Allstate, this latest catastrophe bond will be the twenty-first in the Sanders Re series of deals and the firm’s twenty-third cat bond in total that we’ve tracked and analysed.For its latest cat bond transaction, Allstate is using the Sanders Re II Ltd.vehicle for the issuance of four tranches of Series 2025-1 cat bond notes, we understand.

Back in December, Allstate secured its second-largest cat bond ever, with the deal settling to provide the company $650 million of occurrence reinsurance protection.Now, the company is back with a typical early year issuance of a cat bond to provide similar multi-peril and per-occurrence reinsurance, across all US states except for Florida, to further build out its reinsurance tower with the support of the catastrophe bond market.The notes Sanders Re II Ltd.

will issue, will be sold to capital market cat bond investors and the proceeds used to collateralize reinsurance agreements between the issuer and Allstate.That reinsurance agreement will cover the insurer against personal lines property and auto losses from multiple US perils, specifically named storm, earthquake, severe weather, wildfire, volcanic eruption, or meteorite impact events.The reinsurance protection from this Sanders Re II 2025-1 cat bond will cover Allstate 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, and all coming on-risk from April 1st 2025.

Cat bonds with a five-year duration are rare in the market and so this issuance sees Allstate looking to lock in capital markets backed reinsurance for a longer-term, than its more typical three and four year term notes.With the cat bond market offering attractive pricing at this time, Allstate looks to recognise this and capitalise on investor appetites at this time to secure long-duration fully-collateralized reinsurance coverage.All four tranches of Series 2025-1 notes that Sanders Re II is offering are as yet unsized, but we’re told the total limit sought is for $300 million or more in reinsurance across them.

All four tranches would attach their coverage above $4.25 billion of losses to Allstate, but occupying shares of different slices of its reinsurance tower.These seem to be components of the fifth and sixth layers of Allstate’s reinsurance tower (perhaps extending into layers seven and eight), which last year were all filled out with single-year duration traditional reinsurance.So this deal could increase the proportion of Allstate’s reinsurance tower that is funded in cat bond form, which would be a positive signal for the market.

.A Class A-1 tranche of three-year notes will participate in an almost $998.64 million layer excess of the $4.25 billion attachment and will have an initial attachment probability of 0.72% and an initial base expected loss of 0.6221%, while they are being offered with price guidance in a range from 4% to 4.25%, we are told.A Class A-2 tranche of five-year notes will participate in that same layer and will have the same initial attachment probability of 0.72% and initial base expected loss of 0.6221%, while they are being offered with price guidance in a range from 4.25% to 4.5%.

A Class B-1 tranche of three-year notes will participate in an almost $2 billion layer excess of the $4.25 billion attachment and will have an initial attachment probability of 1.1% and an initial base expected loss of 0.8771%, while they are being offered with price guidance in a range from 4.5% to 4.75%, sources said.A Class B-2 tranche of five-year notes will participate in that same layer and will have the same initial attachment probability of 1.1% and an initial base expected loss of 0.8771%, while they are being offered with price guidance in a range from 4.75% to 5%.Given the attachment probabilities of the two Class A tranches and the two Class B tranches differ, it may be there is inuring reinsurance at different levels.

We can’t be certain from the information we’ve sourced.The five-year notes come with a slight uplift in spreads compared to the three-year, so it will be interesting to see how this deal is received and where Allstate adds size, if it has the appetite to.It does appear that if this deal gains strong investor support, Allstate’s Nationwide reinsurance tower could look quite different after its April 1st renewal this year.

You can read all about this from Allstate and every other catastrophe bond issuance in the extensive Artemis Deal Directory..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.Our can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.