SafePort and SafeChoice secure $125m Gateway Re II debut cat bond

SafePort Insurance Company and SafeChoice Insurance Company, two carriers linked to coastal property managing general underwriter SageSure, have now secured $125 million of named storm reinsurance protection with their debut Gateway Re II Ltd. (Series 2023-1) catastrophe bond.

The debut cat bond to benefit these two carriers upsized by 25% while marketing and has now been priced at the low-end of initial guidance, representing a strong result for a first time cat bond sponsorship for this pair.

SageSure was known in the cat bond market for catastrophe bonds before this deal, having cat bonds that have been issued to benefit its SureChoice Underwriters Reciprocal Exchange (SURE), the two Gateway Re Ltd. issuances, the most recent being from February 2023.

This Gateway Re II Ltd. catastrophe bond first hit the market in March, seeking named storm reinsurance from the capital markets for two SageSure carriers, SafePort Insurance Company and SafeChoice Insurance Company.

At launch it was targeting $100 million of US named storm reinsurance for the states of Alabama, Louisiana, Mississippi, New York, North Carolina, South Carolina, Texas, and Virginia, across a three-year period on an indemnity trigger and per-occurrence basis, for the two ceding insurers, SafePort and SafeChoice.

As we reported earlier this week, the target issuance size was increased to $125 million, while the price guidance was narrowed.

Now, the notes have been priced to provide that upsized $125 million of reinsurance target, we’re told.

The Class A notes, which have an initial expected loss of 1.4%, were first offered to cat bond funds and investors with price guidance in a range from 9.5% to 10.25%, but that was narrowed and lowered to between 9.5% and 9.75%.

We’re now told the notes have now been priced to pay investors a spread of 9.5%, so the bottom end of initial price guidance and a roughly 4% reduction from the initial mid-point of the range.

For debut cat bond sponsors an upsized and priced down cat bond issuance can be considered a strong result, as well as a further demonstration of investor demand at this time of vigorous cat bond market activity.

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.