Gateway Re II Ltd. cat bond launched for two more SageSure insurers

We’ve learned that a new catastrophe bond has been launched that aims to provide its reinsurance protection to two more of the insurers linked to coastal property managing general underwriter SageSure, with a $100 million or greater target set for the Gateway Re II Ltd. (Series 2023-1) cat bond issuance.

SageSure is already known in the cat bond market as it has already secured catastrophe bond protection twice for its SureChoice Underwriters Reciprocal Exchange (SURE), through two Gateway Re Ltd. issuances, the most recent being in February 2023.

Now, a new structure Gateway Re II Ltd. has been registered in Bermuda for issuing catastrophe bonds that will provide capital markets backed collateralized catastrophe reinsurance protection to two other SageSure-linked insurers, SafePort Insurance Company and SafeChoice Insurance Company.

SafePort Insurance underwrites property insurance in Alabama, Florida, Louisiana, Mississippi, New York, North Carolina, South Carolina, and Texas, while SafeChoice Insurance only underwrites property risks in New York.

We’re told by sources that Gateway Re II Ltd. will be used to issue a single tranche of Series 2023-1 Class A notes, with a target for $100 million or greater to be issued.

The notes will be sold to cat bond investors and the proceeds used to collateralize a named storm reinsurance agreement between the structure and the two ceding insurers, SafePort and SafeChoice.

The notes will provide a source of reinsurance against losses from US named storms across the states of Alabama, Louisiana, Mississippi, New York, North Carolina, South Carolina, Texas, and Virginia, we understand.

The coverage will run for a three-year period and be afforded on an indemnity trigger and per-occurrence basis.

The $100 million of Class A notes will have an initial attachment probability of 2.4% and would attach at $130 million of losses, covering a share of a layer of the reinsurance tower up to $280 million, giving room for the deal to upsize as much as 50%, we’re told. We also believe that layer inures to other reinsurance, so the effective attachment point may be higher, in dollar of loss terms.

The notes come with an initial expected loss of 1.4% and are being offered to cat bond funds and investors with price guidance in a range from 9.5% to 10.25%, sources said.

Which is a relatively high multiple-at-market, so given the way recent cat bonds have been pricing down, it will be interesting to see if this new one does the same.

You can read all about this new Gateway Re II Ltd. (Series 2023-1) catastrophe bond and every other cat bond issuance since the market began in our extensive Deal Directory.