SageSure lifts target to $60m for county-weighted Gateway 2024-4 cat bond

SageSure, the coastal property managing general underwriter, has lifted the target for its second county-weighted industry-loss trigger catastrophe bond, with now $60 million of hurricane protection sought from the issuance of Gateway Re Ltd. (Series 2024-4) notes.

It’s the second time SageSure is aiming to secure county-weighted, PCS trigger, aggregate retrocessional reinsurance protection to protect a number of its underwriting entities peak tail exposures.

The company sponsored a three-year $50 million Gateway Re Ltd. (Series 2023-3) issuance a year ago.

Now, the MGU has returned, initially with a $50 million target for this Gateway Re 2024-4 cat bond, which was launched to investors earlier this month.

This year, the coverage extends a little further, with the named cedents to this cat bond being SageSure’s captive reinsurance vehicle Anchor Re, the SureChoice Underwriters Reciprocal Exchange (SURE) and Elevate Reciprocal Exchange and the structure is designed to protect the companies in the event more than one major hurricane impacts their portfolios.

Effectively, this is a second-event cover, as the terms feature a loss cap per-event, so more than one major hurricane would be required to put these notes at-risk.

As we said, at launch Gateway Re Ltd. was targeted to issue a $50 million or greater tranche of Series 2024-4 Class A notes, but we’re now told by sources that the size of the issuance has increased slightly to $60 million.

The notes will provide SageSure’s reciprocal carriers and Anchor Re with a source of US named storm retrocessional reinsurance protection just for the coming hurricane season, with the risk period over at the end of 2024, using a trigger structured on a county-weighted PCS industry-loss index and annual aggregate basis.

There will be a franchise deductible of $5m per-event and a loss cap for single events that is the same as the attachment level, which means two events are required for a loss of principal to occur.

The now $60 million of Series 2024-4 Class A notes that Gateway Re Ltd. is seeking to issue have an initial base expected loss of 2.22% were initially offered with price guidance in a range from 84% to 85% of par, being zero-coupon in nature,  which is a rough 15% to 16% spread equivalent.

We’re now told the upsized $60 million of notes have seen their pricing fixed at what is effectively the upper-end of guidance, at 84% of par, so a rough 16% spread equivalent.

It’s good to see SageSure making progress with this catastrophe bond, having recently pulled the issuance of another in response to market conditions.

SageSure has demonstrated a significant commitment to the catastrophe bond market, with now eight successful issuances (including this one, which we presume will be) since it first entered the market in 2022.

You can read all about this new Gateway Re Ltd. (Series 2024-4) catastrophe bond and every other cat bond deal in the Artemis Deal Directory.