The latest catastrophe bond from coastal property managing general underwriter SageSure looks likely to price at the bottom-end of initial guidance, as the firm seeks a lower spread for its first county-weighted aggregate retrocessional cat bond, the $50 million Gateway Re Ltd. (Series 2023-3) issuance.
The latest cat bond to benefit entities linked to MGU Sage Sure launched at the end of June and appears set to be another that prices below the initial guidance mid-point.
This is the fourth time SageSure entities have been in the catastrophe bond market this year, and will be the fifth in just over one-year.
The MGU has seen three Gateway Re Ltd. issuances that protect its reciprocal change underwriting vehicles, the $150m Gateway Re Ltd. (Series 2022-1), the $355m Gateway Re Ltd. (Series 2023-1), the $100m Gateway Re Ltd. (Series 2023-2), and also one $125m Gateway Re II Ltd. (Series 2023-1) issuance for two other SageSure-linked carriers.
This latest Gateway Re 2023-3 cat bond sees a different approach, with county-weighted aggregate retrocessional protection sought via its captive reinsurance vehicle Anchor Re.
This latest Gateway Re Ltd. deal launched with a target to issue a $50 million or greater tranche of Series 2023-3 Class A notes to provide a source of collateralized retrocession to Anchor Re.
Anchor Re provides operates as a reinsurance captive to SageSure’s carriers, so effectively the coverage will span much of the MGU’s book.
The notes issued will ultimately provide SageSure’s carriers, with a three year source of US named storm retrocessional reinsurance protection, structured on a county-weighted industry-loss index and annual aggregate basis, across select states and running to the end of June 2026.
We’re told the target size is unchanged so far, with still $50 million of notes being offered.
The $50 million of Series 2023-3 Class A notes that Gateway Re Ltd. is seeking to issue come with an initial base expected loss of 2.22% and were first offered to cat bond investors with spread price guidance in a range from 10.5% to 11%.
We’re now told the updated spread guidance is for a price of between 10% and 10.5%, so targeting the low-end of guidance or below that.
Which means SageSure appears likely to secure another strong execution for its latest cat bond, as it continues to deeply embed the capital markets within its reinsurance arrangements.