allstate insurance eyes up to $1bn from Sanders Re III & IV catastrophe bonds
Allstate insurance is seeking a record amount of collateralized catastrophe reinsurance in a single trip to the cat bond market, aiming to secure between $900 million and $1 billion across two separate Sanders Re vehicles. The dual issuances would add sizeable multi-year, multi-peril capacity to the insurer’s nationwide ex-Florida reinsurance tower.
Deal structure and pricing guidance
The program is being offered through two special purpose insurers: Sanders Re IV Ltd. (Series 2026-1A) and Sanders Re III Ltd. (Series 2026-1B). Each vehicle is targeting between $450 million and $500 million of fully collateralized limit, split across two tranches per vehicle for a total of four tranches on offer.
Under Sanders Re IV Ltd., the Series 2026-1A notes comprise Class A-1 (four-year) and Class A-2 (five-year) tranches. Both carry an initial base expected loss of 0. 6851%. Initial spread guidance has been tightened, with the risk interest spread now indicated at roughly 3. 5%.
The Sanders Re III Ltd. Series 2026-1B notes include Class B-1 (four-year) and Class B-2 (five-year) tranches. These tranches have a higher base expected loss of 1. 8874% and currently show spread guidance around 5%.
Coverage terms and market implications
All four tranches offer per-occurrence and indemnity-triggered protection for personal lines property and auto losses across the United States, excluding Florida. The policies cover a broad range of perils commonly included in nationwide ex-Florida cat bonds: named storm, earthquake, severe weather, wildfire, volcanic eruption, and even meteorite impact events.
The issuer is pursuing both four-year and five-year limits, reflecting a desire for multi-year stability in its reinsurance program. If the target is met, this issuance would represent the largest single-visit amount of catastrophe reinsurance limit Allstate has sourced from the cat bond market to date.
Placement context and trajectory
When the company returned to the capital markets earlier in January 2026 (ET), the original plan called for up to $500 million of collateralized multi-year reinsurance in total. Initial filings had envisioned $250 million per series; those targets were subsequently increased to the current $450–$500 million per-series range, lifting the combined goal to between $900 million and $1 billion.
The shift upward in target size and the updated spread guidance suggest demand-side dynamics that make a larger placement feasible for the sponsor while still reflecting market views on expected loss and investor compensation. The mix of lower-base-loss A-class notes and higher-base-loss B-class notes gives investors differentiated exposure profiles across the same underlying peril set.
For the insurer, securing a significant tranche of capital-market-backed, fully collateralized reinsurance reinforces its strategy of diversifying capacity beyond traditional retrocession and treaty markets, particularly for large, multi-peril exposures outside of Florida.
Market participants will be watching final order books and pricing as the syndication progresses, with the potential close to mark a notable milestone in the company’s use of insurance-linked securities to manage catastrophe risk.
