US primary insurer Allstate is looking to secure a new, $400 million gap fill layer of reinsurance protection in the second quarter of 2021, taking its occurrence reinsurance tower to the largest it has ever been.
The insurer has reported that losses from the Q1 winter storms and freezing weather in the U.S. have enabled it to recover $195 million from the coverage provided via its 2019 catastrophe bond.
These losses triggered the firm’s lowest layer of catastrophe bond backed reinsurance and the erosion of principal has continued, now reaching $195 million.
In its Q1 2021 results, the firm said that the erosion to the $400 million cat bond has now reached $195 million, leaving just $105 million of coverage for future losses or loss creep.
As a result, Allstate will look to replace the eroded part of its reinsurance tower with a new gap fill layer in Q2 2021.
At roughly $400 million, this new layer of reinsurance will sit in the company’s per-occurrence reinsurance tower, and extends this tower for 2021 and onwards to cover $5.763 billion of losses, after a $500 million retention.
This new layer is designed to attach just below $4 billion of losses and sit alongside the remaining $105 million of per-occurrence protection from the cat bond (Sanders 2019-1).
By adding $400 million of reinsurance, Allstate’s occurrence reinsurance tower will now be the largest it has ever been, up from just under $5 billion last year, with some other expanded layers adding in total roughly $770 million of reinsurance.
So, with the carrier set to renew its new and enlarged tower in Q2, the reinsurance programme for its Nationwide covers can be seen below.
