A quieter July in catastrophe loss terms resulted in US insurer Allstate only reporting $184 million in pre-tax impacts from severe weather events, which has lifted the total for the current annual aggregate risk period for its catastrophe bonds to $2.174 billion so far.
But, it’s important to remember that not all of these catastrophe losses will qualify to erode the cat bond aggregate retentions, especially in a lighter month with numerous smaller events.
Allstate’s annual aggregate year for its nationwide coverage cat bonds begins on April 1st.
The company had estimated $594 million of pre-tax catastrophe losses for April 2025, then a further $777 million for May and an additional $619 million pre-tax for June.
For July 2025, Allstate has reported a much lower $184 million of catastrophe losses for the month pre-tax, or $145 million after-tax.
Notably though, the July cat losses came from 19 wind and hail events experienced during the month, Allstate explained.
With Allstate’s aggregate cat bonds having a $50 million per-event retention under their terms, it seems that perhaps only a small amount, if any, of the July catastrophe burden would actually qualify to erode those retention layers, so July may be a month of much less relevance to the cat bond community than the previous three were.
Previously, we’ve estimated that Allstate sees around 45% to 60% of its pre-tax catastrophe losses qualifying under the terms of its cat bonds, with the magnitude of loss events the main driver (larger events qualify more substantially towards aggregate deductible erosion). As a result, a lighter month like July where multiple smaller events occurred may make little or no difference to the erosion.
Following Allstate’s 2025 reinsurance renewal, which was completed in time for April 1st, the aggregate Sanders Re cat bonds now sit above an attachment level of $4 billion for this current risk period.
As a result, we’d estimate they sit a long way above the erosion from qualifying losses seen so far this year.
It’s worth also noting though, that Allstate recently purchased a new US homeowners aggregate reinsurance arrangement that runs for a seven month duration, from June 1st 2025 through December 31st.
That homeowners insurance focused aggregate reinsurance cover attaches after $3.5 billion of aggregate losses to the homeowners book, so not quite as high up as the cat bonds, providing $325 million of cover across a $500 million layer beyond that.
But more important to note is the fact that it covers Allstate homeowners catastrophe losses for events greater than just $1 million, meaning it might see faster erosion of the attachment deductible.
