US primary insurer Allstate Corporation has announced that its estimated catastrophe losses for the month of February of $577 million, pre-tax ($456 million, after-tax).
At this level, Allstate has now surpassed the retention level of its nationwide aggregate reinsurance cover, with the annual risk period ending March 31, 2021.
Catastrophe losses in February comprised two events at an estimated cost of $590 million, pre-tax ($466 million, after-tax), partially offset by favourable prior period reserve re-estimates.
The severe winter freeze, primarily impacting Texas, resulted in gross losses of approximately $1.3 billion.
However, net losses were recorded at just $567 million, pre-tax ($448 million, after-tax), reflecting anticipated reinsurance recoveries partially offset by reinstatement premiums.
Additionally, Allstate recorded a favourable catastrophe result of $55 million for January 2021 due to subrogation recoveries related to the 2018 Woolsey wildfire.
This brings the insurer’s estimated February quarter-to-date catastrophe losses to $522 million, pre-tax ($412 million, after-tax).
Notably, the extent of catastrophe losses so far this year could mean that Allstate’s Sanders Re 2019-1 catastrophe bond’s aggregate tranche is set to trigger.
This $300 million cat bond covers named storms (excluding Florida), earthquake, severe weather, fire and other perils, providing both occurrence and aggregate reinsurance protection in Allstate’s nationwide aggregate reinsurance tower.
The aggregate reinsurance coverage attached at $3.576 billion of gross losses as of the current risk period, with the Sanders Re II 2019-1 cat bond then providing $300 million of aggregate reinsurance protection above that trigger point across a $400 million layer, so it covers 75% of the losses above that.