Allstate estimates $587m of July catastrophe losses, $226m from hurricane Beryl
US primary insurer Allstate has revealed that 20 July catastrophe events drove $587 million of losses for the company, with an initial estimate that $226 million came from hurricane Beryl’s impacts in the United States, a figure that could further erode some of the retention beneath its aggregate catastrophe bonds.
Allstate said today its pre-tax catastrophe losses for July were $542 million, or $428 million after-tax, with these figures differing from the July experienced loss total likely due to some reductions in prior period event losses also being included in the tax-relevant totals.
This figure takes the run-rate of pre-tax catastrophe losses for the period since April 1st, which is when Allstate’s aggregate cat bond risk-period began, to around $2.64 billion, including the $2.1 billion second-quarter cat loss disclosure.
As we always qualify, those aggregate nationwide coverage Sanders Re cat bonds feature a $50 million per-event deductible, so not all of the pre-tax cat loss figure qualifies under them anyway.
As a result, the pre-tax figure always differs to the annual aggregate cat loss figure reported to holders of the cat bonds and is typically lower, but it is certainly still rising with these additions.
Those aggregate Sanders Re cat bonds, that sit in Allstate’s Nationwide reinsurance tower, would only attach when the relevant total reached $3.6 billion or higher.
With the $50 million event deductible in-force across all the aggregate cat bonds currently in Allstate’s tower, it is likely the total for the annual risk period will be running some way behind the reported pre-tax $2.64 billion number.
But hurricane Beryl will almost certainly have eaten up another chunk of the aggregate retention beneath the cat bonds, which effectively raises the risk of them attaching for losses accumulated over the rest of the risk period that runs to March 31st 2025, we believe.
The $587 million figure comes from the catastrophe losses booked in the month by Allstate, of which there were 20 events.
Hurricane Beryl was seemingly the largest of these, as it has been broken out with the initial estimate of $226 million.
Allstate’s Nationwide traditional reinsurance coverage attaches excess of retentions of $500 million to $1 billion, depending on layer, so it seems unlikely the company would make any excess-of-loss recoveries for its losses from hurricane Beryl.
You can see Allstate’s Nationwide catastrophe reinsurance tower where these aggregate cat bonds sit in our article from after its April renewal.
View details of every catastrophe bond ever sponsored by Allstate here.
