SageSure targets upsized $100m Gateway Re 2023-2 reciprocal cat bond

The target size has been lifted to $100 million for coastal property managing general underwriter SageSure’s latest catastrophe bond, with the Gateway Re Ltd. (Series 2023-2) cat bond now positioned to provide a larger than originally cited slice of reinsurance for the SureChoice and Elevate reciprocal exchanges.

As we reported earlier this month, this is already the third catastrophe bond issuance of 2023 to benefit underwriting entities linked to SageSure.

This new Gateway Re 2023-2 cat bond will provide reinsurance to support the SureChoice Underwriters Reciprocal Exchange and the Elevate Reciprocal Exchange, two of the SageSure linked underwriting reciprocal entities.

The notes will provide those reciprocals with a single wind season of reinsurance, covering second and subsequent event losses from named storms affecting the US states of Alabama, North and South Carolina, Louisiana, Mississippi, and Texas to December 2023, on an indemnity trigger and per-occurrence basis.

The initial target was for the single tranche of Series 2023-2 Class C notes to provide $75 million in reinsurance, but we’re now told that the size target has been lifted to $100 million.

The notes come with an initial base expected loss of 0.8% and were first offered to cat bond investors with price guidance in a range from 89% to 90% of par (a rough coupon equivalent would be between 10% and 11% therefore).

We’re now told that the price guidance has been updated, to between 90% and 91% of par (a rough coupon equivalent would be between 9% and 10% therefore).

At the same time, the issuance date has slipped by about one week, pushing this cat bond into June when it had originally been slated as a May issuance. This is likely due to how busy the pipeline is at this time, with investors only able to analyse so many cat bonds at once and so any less-typical (such as second and subsequent event covers) may take a little more time to process by the market.