Allstate, the US personal lines heavyweight, has “substantially placed” its 1 June cat XoL reinsurance program and with increased limit from both the traditional and ILS markets.

The Illinois-headquartered insurer said in a 10-Q filing that it purchased $2.6bn of cat reinsurance limit from the traditional market that incepts on 1 June 2018 in addition to $1.2bn of cover from the ILS markets.

In contrast, for the 1 June 2017 renewal, Allstate bought lower limits of $2.5bn traditional and $1.1bn from ILS investors, according to the same filing from this time last year.

Allstate said in its filings last week that it had “substantially completed the placement of (its) 2018 catastrophe reinsurance program” other than the Florida component and the aggregate motor treaty.

The carrier’s objective is to have no more than a 1 percent likelihood of annual net cat losses of more than $2bn.

Last year, it endured $3.2bn of gross cat losses and $2.6bn of cat losses in 2016.

Overall, its 1 June 2018 nationwide cat reinsurance programme will provide $4.5bn of limit, less a $500mn retention which brings it broadly in line with its 2016 placement.

In the multi-year, multi-layered treaty there are a number of lines that were only partially placed - with Allstate co-insuring the remainder (see chart) - explaining the difference between the $3.8bn of external limit and the $4.5bn xs of $500mn in the stack.

nationwide excess cats reins program

Last year, the main nationwide cat treaty was reduced to $4.42bn or limit from $4.55bn in 2016.

As many components of the main nationwide treaty are multi-year there is significant overlap between the annual programs, but differences include a new $69mn layer written by rated carriers (see chart) and a new, $500mn top layer provided by collateralised ILS markets following the recent issuance of Sanders Re 2018.

allstate table new

Initially, Sanders Re was looking to place $400mn of top layer limit, but this was increased to $500mn following strong investor demand during the February roadshow which also saw pricing drop. 

In addition to its main nationwide cat program, Allstate buys the following treaties:

Nationwide cat excess program; New Jersey excess cat program; Kentucky earthquake excess cat program; Florida excess cat agreement; aggregate excess cat automobile contract for Florida and SE states and an excess & surplus earthquake contract. 

Allstate explained that the total cost of the programs In the first quarter was $85mn, down slightly from $93mn in the first quarter of 2017.

“The decrease is related to lower costs in Allstate brand homeowners, partially offset by costs related to Aggregate Excess Catastrophe Reinsurance Contract - Automobile - Florida and Southeast States that became effective on June 1, 2017”, the firm revealed last week.

allstate florida excess cats reins agreement