SURE & Elevate get $130m Gateway Re second event cat bond priced below guidance
SageSure linked underwriting partners the SureChoice and Elevate reciprocal exchanges’ have now secured the upsized $130 million of second and subsequent event reinsurance from their latest Gateway Re Ltd. (Series 2024-2) catastrophe bond issuance.
The pair returned earlier in March, seeking between $100 million and $130 million of named storm reinsurance protection on a second and subsequent event basis from the capital markets with this latest Gateway Re cat bond.
It came on the heels of the completion of their latest multi-year and first-event cat bond, the $250 million Gateway Re Ltd. (Series 2024-1) issuance.
As we later reported, this Gateway Re 2024-2 cat bond looked set to achieve the upper-end of that target, to provide $130 million of protection, while like so many other recent cat bonds, the price guidance was reduced as the sponsors targeted better than expected price execution from the deal.
Now, we’re told the upsized $130 million issuance has been priced and the reinsurance capacity secured, while the pricing has been finalised below the initial guidance that was offered.
As a result, the Gateway Re Ltd. will issue a single $130 million Class C tranche of Series 2024-2 cat bond notes, that will cover the reciprocal exchanges for named storms affecting the US states of Alabama, Florida, North and South Carolina, Louisiana, Mississippi, and Texas, on an indemnity, per-occurrence basis, for second and subsequent event losses.
The notes will only provide their protection across a single hurricane season, coming on-risk after issuance and running until December 15th.
The now set to be $130 million of Class C 2024-2 notes have an initial expected loss of 1.23% and were initially offered with price guidance of 90.5% to 91.5% of par, so are being structured as zero-coupon notes, so a rough spread equivalent of 8.5% to 9.5%.
As we reported, that price guidance was updated to between 91.5% and 92% of par, which indicated a reduction to a rough spread equivalent of 8% to 8.5%.
Now, we’re told the final pricing has seen the notes priced at 91.75% of par, which represents a rough spread equivalent of 8.25%, so below the initially marketed guidance, so an approximate decline in price of just over 8% from the initial range mid-point.
As we also reported yesterday, with the completion of the Gateway Re 2024-1 deal, SageSure, the specialist independent managing general underwriter of property catastrophe exposed insurance, had procured over $1 billion in catastrophe bond backed reinsurance coverage for its underwriting partners.
With this latest second event cat bond deal now priced, once it settles in April the SageSure underwriting partners cat bond backed reinsurance haul under the Gateway Re franchise will hit $1.16 billion of risk capital that has been issued.
You can read all about this new Gateway Re Ltd. (Series 2024-2) catastrophe bond and every other cat bond deal in the Artemis Deal Directory.
