The Chilean-American author Isabel Allende has won Spain’s €1m (£843,000) Premio Planeta, one of the world’s most lucrative literary prizes, under a pseudonym, with a sequel to her celebrated debut novel, The House of the Spirits.

Allende, 84, won the 75th edition of the award on Thursday with La hora antes del alba, which returns to the characters of her 1982 novel, a multigenerational family saga set against political upheaval in a country inspired by Chile.

The new story follows Alba, the granddaughter of Esteban Trueba and Clara del Valle, as she tries to recover from imprisonment and torture during Pinochet’s dictatorship, according to Reuters. Allende said the book would bring the universe of The House of the Spirits to a close. The 1982 novel is often read alongside Daughter of Fortune and Portrait in Sepia as part of a loose trilogy of interconnected family sagas.

Speaking at the award ceremony in Barcelona, attended by King Felipe VI and Queen Letizia, Allende said it was “like winning the Nobel”.

“I had never entered a competition because I wanted to avoid the embarrassment of coming last,” she said. “At my age, there is very little to lose.”

She said she had been prompted to write the sequel by decades of readers asking what happened to Alba. She also drew parallels between the political circumstances surrounding the novel and the contemporary rise of extremism. Allende was forced into exile after the 1973 military coup led by Augusto Pinochet that overthrew the Chilean president Salvador Allende, a cousin of her father. Allende had been Latin America’s first democratically elected Marxist leader. Under Pinochet’s regime, an estimated 40,000 people were tortured and more than 3,000 killed.

“Now that I see so many democracies threatened by authoritarianism, extreme nationalism and even fascism, I feel again the fear that led me to leave my country,” she said.

Allende is one of the best-known writers in the Spanish-speaking world, whose books have sold more than 80m copies worldwide and been translated into more than 40 languages. The prize is open to unpublished manuscripts, with the option of submitting under a pseudonym, and Allende entered under the name Luz Ventura, with the fictional title Los que faltan.

However, the judges may have been able to pick up on Allende’s style. “I’d be very surprised if the judges did not know that it was Isabel Allende,” said Prof Duncan Wheeler, the chair of Spanish studies at Leeds University and president-elect of the Association of Hispanists of Great Britain and Ireland. “You have to bear in mind that the Planeta prize is one of the most generously remunerated in the Spanish-speaking world, but definitely not the most prestigious.”

The prize has at times faced criticism over the choice of winner. In 2021, the prize was awarded to La bestia, a thriller published under the pseudonym Carmen Mola, which had been marketed as the identity of a female author. At the awards ceremony, it was revealed that Mola was in fact three male writers – Jorge Díaz, Agustín Martínez and Antonio Mercero.

The prize is run by Planeta, one of the largest publishing groups in the Spanish-speaking world, and includes the condition that the winning book be published by them. Allende has been published by Plaza & Janés, an imprint of Penguin Random House, since The House of the Spirits, so this marks a significant coup for Planeta.

Despite the option to submit pseudonymously, the prize has a history of favouring established writers and TV figures: past winners of the prize have included prominent Spanish-language authors such as Juan Marsé and Manuel Vázquez Montalbán, and the controversial TV personality Juan de Val.

Asked about the perceived trend of awarding the prize to figures known for appearing on TV shows, José Creuheras, the president of the Planeta Group, said, according to the Spanish newspaper El País: “I’m not in a position to say whether the Planeta Prize has more or less prestige than it did in the past. We have some of contemporary literature’s biggest names among our winners and finalists. The prize’s reach, as measured by the figures, speaks for itself, and the number of people taking an interest in the Planeta is growing.”

The runner-up was the Spanish writer and screenwriter Sergio Hernández, whose historical novel La añoranza won €200,000.