The US primary insurance carrier Allstate reported net catastrophe losses of $544 million, mainly attributed to the severe convective weather and hail storms that hit the US in April, as well as loss creep from previous events.
After-tax, the insurer said that the $544 million of catastrophe losses would be reduced to $430 million after-tax.
During April 2021, five catastrophe events impacted Allstate.
Allstate estimates the global cost of all five catastrophe events at $490 million, though it was reported that one large hail event primarily affecting Texas and Oklahoma accounted for just over 60% of the total damage in April.
That must have happened the night when large hail struck in Western Oklahoma, south of Oklahoma City, as well as neighborhoods around Fort Worth and San Antonio in Texas.
As we have previously explained, hail storms could have caused more than $1 billion in insurance and reinsurance market losses and with Allstate now reporting almost half that number alone, it seems almost certain that the hail on April 28th will surpass the billion dollar level.
Reinsurance for Sanders Re cat bonds
This year, Allstate has been hit with significant catastrophe losses primarily from the winter storms and Texas freeze event.
The insurer made reinsurance recoveries on its Sanders Re catastrophe bonds, with further March losses reducing the cat bond-backed aggregate coverage even more.
Reinsurance for Sanders Re cat bonds for Allstate’s aggregate risk period reverts to the end of March. Therefore, the $490 million of April 2021 catastrophe losses will not add to the current cat bond losses, but will begin the aggregation for the next risk period.
However, Allstate has also revealed this month that the remaining $54 million of catastrophe losses it plans to book for April is a result of unfavorable reserve estimates for prior periods, meaning losses are creeping higher based on cat events from previous months.
At this time, it’s unclear from Allstate’s reporting whether its prior period reserve additions will affect the loss picture for its Sanders Re cat bonds.
Allstate has faced a gap in its tower because of recent catastrophe losses and reinsurance recoveries, which it is now looking to fill with another Sanders Re catastrophe bond issuance.
The “So What”: Allstate is Paying, but that Window Will Close
Allstate will continue to delay claims and amortize it’s losses over time, property owners need to be aggressive in documenting, filing, and demanding full payment for their claim. Beware of cosmetic exclusion clauses and make sure you understand how to fully articulate losses as a result of disruption to business operations.