Reinsurance News

Allstate extends top of catastrophe reinsurance tower to all-time high of $7bn

2nd March 2023 - Author: Luke Gallin

U.S. primary insurer Allstate has raised the top of its Nationwide Excess Catastrophe Reinsurance Program tower to a record high of $7 billion after the placement of a new $100 million catastrophe bond transaction.

At this level, it’s the highest amount of reinsurance protection that the insurer has secured to cover its catastrophe losses, and is above the $6.6 billion as at the start of the 2022 mid-year reinsurance renewals by $400 million.

At the start of 2022, the tower extended up to $5.763 billion, and at the start of 2021 and 2020 this tower was only $4.984 billion.

So, from the start of 2020, Allstate’s main U.S. catastrophe reinsurance tower has extended upwards by more than $2 billion, reaching a high of $7 billion for the year ahead.

“In the fourth quarter of 2022, we increased coverage $100 million for the Program through the issuance of a catastrophe bond,” said Allstate recently.

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Now, while the new cat bond, Sanders Re III Ltd. (Series 2022-3), is sized at $100 million, it adds $400 million to the total as it only covers 25% of losses through that layer of the tower for Allstate.

You can see Allstate’s Nationwide Excess Catastrophe Reinsurance Program tower, as it stood at the end of 2022, including the latest cat bond, below.


As was the case at the mid-year 2022 renewals, this tower still has a $500 million retention for Allstate, which is interesting in light of the fact reinsurers were known to be pushing for higher attachments in current market conditions.

The insurer also maintains a co-participation for each layer in the tower, meaning it retains a share of losses alongside its reinsurance counterparts.

In light of the hardening reinsurance market landscape, it’s not surprising that Allstate’s property catastrophe reinsurance programs for 2022, excluding reinstatement premiums, came it the higher cost of $788 million, compared with $556 million in 2021.

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