SURE & Elevate seek up to $130m Gateway Re 2024-2 second event cat bond
Having only just priced a new first-event catastrophe bond, the SageSure linked SureChoice and Elevate reciprocal exchanges are back and already seeking up to $130 million of second and subsequent event named storm reinsurance from a Gateway Re Ltd. (Series 2024-2) cat bond issuance.
The build-out of capital markets backed catastrophe reinsurance protection for these two reciprocal exchanges continues, with this set to be the fourth cat bond to benefit them both, while there is also one in-force that only benefits SureChoice.
This time, second and subsequent event reinsurance protection is being sought for the SureChoice Underwriters Reciprocal Exchange and the Elevate Reciprocal Exchange, building on a first second-event cat bond sponsored by the pair almost a year ago.
Gateway Re Ltd., the Bermuda domiciled SPI, will issue a single Class C tranche of Series 2024-2 cat bond notes, with a target for between $100 million and $130 million of second-event reinsurance for the reciprocal exchanges.
The notes will be sold to catastrophe bond funds and investors, while the proceeds will be used to collateralize a reinsurance agreement between the SPI and the ceding entities which are the SureChoice Underwriters Reciprocal Exchange and the Elevate Reciprocal Exchange.
The Class C Series 2024-2 notes that Gateway Re Ltd. will issue are designed to cover the reciprocals against losses from 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 in April and running until December 15th, we are told.
The up to $100 to $130 million of notes would attach from $110 million of losses, covering up to $240 million and have an aggregate deductible of the size of that layer, at the $130 million amount (hence a full covered event needs to be seen before this second and subsequent coverage kicks in).
The Class C notes will have an initial attachment probability of 1.99%, an initial expected loss of 1.23% and are being offered with price guidance of 90.5% to 91.5% of par, so are being structured as zero-coupon notes. That is a rough spread equivalent of 8.5% to 9.5%.
SageSure and the underwriting entities it works alongside are aggressively building reinsurance capacity and the capital markets are playing a key role, which bodes well for catastrophe bonds future use by the group of companies.
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.
