SageSure secures largest cat bond yet, as $520m Gateway Re 2025 priced at low-end

SageSure has secured its largest catastrophe bond issuance yet as the Gateway Re Ltd. (Series 2025-1)  deal has now been priced to provide the company with $520 million of first and second event US named storm reinsurance protection, while the notes were priced at the bottom of lowered guidance, Artemis has learned.

In January, SageSure made its return to the catastrophe bond market, with an initial target to secure $410 million of first and second event US named storm reinsurance protection for some of its underwriting entities from what will be the tenth in the Gateway Re series of cat bonds.

In our first update on the deal, we reported that the Gateway Re 2025-1 issuance was destined to be the largest catastrophe bond yet in the series, as SageSure set a new target of between $470 million and as much as $555 million of limit being sought.

As we recently reported in our second update, the size target for this issuance had been fixed for $520 million of notes to be issued, so not quite as much as the upper-end revised target size.

Full details of the coverage each tranche will provide can be found in the Gateway Re Ltd. (Series 2025-1) Deal Directory entry.

The first three tranches will all provide the first event, occurrence reinsurance protection

The $110 million tranche of Class AAA notes have an initial expected loss of 1.07%, and were first offered with price guidance in a range from 5% to 5.5%, which then fell to 4.5% to 5%, and then fell again to 4.25% to 4.5%. Sources have now informed us that the price guidance has been finalised at 4.25%, so the lower end of the new range.

The $130 million Class AA notes have an initial expected loss of 1.79%, and they were first offered with price guidance in a range from 92.25% to 93%, being zero-coupon, which is a rough spread equivalent of 7% to 7.75%, which then fell to 93% to 93.5%, so a rough spread equivalent of 6.5% to 7%, and in our last update, dropped again to 93.5% to 93.75%, so a rough spread equivalent of 6.25% to 6.5%. We have now been told that the pricing for these notes has been finalised at 93.75%, so the low-end of the range.

The $80 million Class A tranche of notes, which still remain at that size, were first offered with price guidance in a range from 11.25% to 12%, which later fell to between 10.75% and 11.25%, and in our recent update, it fell further to between 10.5% and 10.75%. Sources have now told us that the price guidance has been finalised at 10.5%, so the lower end of the range.

The next two tranches of notes are the ones that will provide the second and subsequent event named storm reinsurance and initially there was a target to secure $150 million of protection across these two classes of notes.

The now $50 million C1 tranche of notes have an initial expected loss of 1.31% and being zero-coupon, they were first offered to investors with price guidance in a range from 91% to 91.75%, which is a rough spread equivalent of 8.25% to 9%, but this later fell to 91.75%, so an 8.25% equivalent spread and at the bottom of the initial range.

The now $150 million Class C2 tranche have an initial expected loss of 1.31%, and were first offered with price guidance in a range from 9.25% to 10%, which later narrowed to between 9.5% and 9.75%, but since then the price guidance has been finalised at the low-end of 9.5%.

So SageSure has secured the largest cat bond in the history of its Gateway Re deals for its various underwriting entities, adding $520 million of limit to its capital markets backed reinsurance protection.

You can read all about this new Gateway Re Ltd. (Series 2025-1) catastrophe bond and every other cat bond deal in the Artemis Deal Directory.