Allstate secures new aggregate reinsurance for US homeowners at mid-year

Reflecting growing demand for aggregate risk coverage in the reinsurance market, US primary insurer Allstate has secured a new aggregate reinsurance arrangement for its US homeowners book at the mid-year renewals.

The new protection includes coverage for events exceeding $1 million and provides $325 million of placed aggregate limit within a $500 million layer excess of a $3.5 billion retention.

, when it increased the top of the tower by approximately $1.6 billion to $9.5 billion of cover, excess of a $1 billion retention.

Allstate’s new US homeowners aggregate reinsurance arrangement will run from June 1st, 2025, through December 31st, 2025.

As mentioned, the nationwide aggregate deal provides $325 million in placed limit above a $3.5 billion retention, covering catastrophe losses under U.S. homeowners policies, including in Florida.

The contract is 65% placed, meaning the $325 million sits within a $500 million layer, attaching at $3.5 billion in aggregate qualifying losses and exhausting at $4 billion.

In parallel, the insurer has also completed the renewal of its Florida reinsurance tower, lifting the top to $1.1 billion (see below).

Catastrophe bonds fill out 50% of the tower between $404 million and $704 million of losses, and then 100% of the tower from that level up to $1 billion.

, and all others, in the of our sister publication, Artemis.

Jess Merten, Chief Financial Officer of Allstate, said in a recent earnings call, “The reinsurance programme and what we ended up placing is always rooted in our economic capital framework and risk and return decision-making that allows us to mitigate risk on both a per-event and aggregate basis.

“Our total catastrophe reinsurance limit that we purchased this year across all programmes was just over $11 billion that’s up $2 billion from last year, and we saw about a 10% risk adjusted decrease in the cost.

“So that’s a very good outcome. We got more coverage for less on a risk-adjusted basis, and we had really good support from both the reinsurance and catastrophe bond markets and that demonstrates really the strength of our programme.”

Merten added, “Our renewal placement process began just after the LA wildfires, literally while they were being extinguished, and we still had strong support from, again, both traditional reinsurers and the cat bond partners that we work with to place the programme.

“So we renewed during the most recent period. We did renew the Florida programme, and we did add some aggregate limit on US homeowners, we added $325 million of limit on an aggregate basis.

“So if you think of the overall programme, we now have $825 million of cat agg limit that’s placed, about $58 million, to be clear, has already been utilised for expected recoveries. Now that leaves us with $767 million remaining aggregate limit on top of our very robust per-occurrence.

“So that’s a high level summary of what we did, the changes that we made, and really, just going back to all of these placements are done through a risk and return lens that we understand, how we effectively using this alternative capital source to lower our capital requirements.”