Gateway Re Ltd. (Series 2025-3)

This Gateway Re Ltd. Series 2025-3 catastrophe bond issuance is set to be the eleventh in the Gateway Re cat bond series, which are all issued to provide capital markets backed reinsurance to protect a range of underwriting entities owned by or linked to coastal property managing general underwriter (MGU) SageSure.

This new Gateway Re 2025-3 catastrophe bond will provide a single hurricane season of named storm reinsurance protection on a fully-collateralized basis, to the Auros Reciprocal Insurance Exchange and Elevate Reciprocal Exchange, Artemis understands.

Using the Gateway Re Ltd. Bermuda domiciled special purpose insurer (SPI), a single tranche of Series 2025-3 Class A notes will be offered for sale to catastrophe bond funds and investors, with the proceeds set to be used to collateralize a reinsurance agreement with the ceding entities Auros Reciprocal Insurance Exchange and Elevate Reciprocal Exchange.

Gateway Re Ltd. will look to issue a single Class A tranche of Series-2025-3 cat bond notes, with a target of $100 million or greater for U.S. named storm reinsurance for the reciprocal exchanges.

The Class A Series 2025-3 notes that Gateway Re Ltd. will issue are designed to cover the two reciprocals against losses from named storms initially covering the U.S. states of Louisiana, Mississippi, South Carolina and Texas, on an indemnity, per-occurrence basis.

The notes will only provide their protection across a single hurricane season, becoming effective shortly after issuance in July, and running through to mid-December 2025, we are told.

The currently $100 million of Class A Series 2025-3 notes would attach their coverage at $225 million of losses, exhausting it at $385 million we understand.

The Class A notes will have an initial attachment probability of 3.66%, and an initial expected loss of 1.83%.

We also understand that the $100 million of Series 2025-3 Class A notes are structured as discounted zero-coupon notes. The notes are currently being offered with price guidance in a range of 93% to 93.5% of par, which roughly equates to a spread-equivalent of between 6.5% and 7%.

Update 1:

The offering size remains unchanged at $100 million for this Gateway Re 2025-3 catastrophe bond issuance, however the price guidance has been lowered to now between 93.5% and 93.75% of par, so a rough spread-equivalent of between 6.25% and 6.5%.

Update 2:

The offering size remained $100 million for this Gateway Re 2025-3 catastrophe bond issuance, but the price guidance was been revised again to a single figure of 93.75%, so the tightest end and what would be a rough spread equivalent of 6.25%. This is where the pricing was finalised.

It’s worth noting that, when we say a rough spread equivalent, it would of course be higher given this cat bond would only pay its premium over a half-year term.