Allstate has returned some principal from one of its outstanding aggregate catastrophe bonds to investors, while extending the maturity on the remaining amount, having ended the last annual aggregate risk period that its cat bonds were subject to with total pre-tax reported catastrophe losses just shy of $4 billion.
Which took the first-quarter of 2026 to $1.24 billion of losses pre-tax and as a result the total across the annual aggregate risk period that the insurer’s aggregate cat bonds were exposed to reached $3.997 billion.
Recall that Allstate’s annual aggregate risk period for its nationwide (ex-Florida) catastrophe bond backed reinsurance protection runs from April 1st each year.
For the last annual risk period that ended at March 31st this year, Allstate had $500 million of nationwide aggregate cat bond limit in-force.
One of those was an initially $175 million Class C notes tranche of the Sanders Re III Ltd. (Series 2022-1) cat bond sponsored in March 2022, which had been due to run to maturity at the end of March this year.
These were the lowest attaching aggregate cat bond notes of the last annual risk period that ran to March 31st 2026, having had an attachment at $4 billion of losses.
The notes featured a $50 million event deductible, which means that far from all of the $3.997 billion of reported pre-tax catastrophe losses from across those twelve months would have qualified under them.
We don’t know what the qualifying loss accumulation was against these Sanders Re III 2022-1 Class C notes, but we’ve now learned that at the end of the annual risk period some of their principal was returned to investors, with the remainder now having an extended maturity date.
We understand that by the end of March 2026, the Class C notes were still listed on cat bond pricing sheets as $175 million of principal, while they were generally marked down for bids of around 60 cents on the dollar.
By early April pricing sheets the remaining principal had been reduced to approximately $91.12 million, with that then being marked down for bids of between 25 and 40 cents on the dollar.
Which suggests a return of capital to holders of the cat bonds, with that $91.12 million being retained in case any losses came due should the toll from the last annual aggregate risk period creep high enough.
We understand the remaining principal of the Sanders Re III Series 2022-1 Class C cat bond notes now has an extended maturity date three years into the future, of April 9th 2029.
In order to extend the maturity, the annual aggregate loss rate must have been rising to a reasonable percentage of the attachment, with perhaps the heavier March 2026 pre-tax catastrophe loss burden the main driver of this.
We understand that the Sanders Re III Series 2022-1 Class A and Class B notes, which were less risky than the now extended Class C notes, have both been matured on schedule in early April this year.
Also read:
– Allstate buys Nationwide occurrence reinsurance to $11.5bn, gets $1bn new aggregate cover.
– Allstate secures $200m of Florida reinsurance with Sanders Re III 2026-2 cat bond.
– Allstate starts 2026 annual aggregate risk period with $870m of April catastrophe losses.
