SureChoice & Elevate secure upsized $250m Gateway Re 2024-1 cat bond

The SageSure linked SureChoice and Elevate reciprocal exchanges have now secured the upsized target of $250 million of capital markets backed named storm reinsurance from their latest catastrophe bond, while the Gateway Re Ltd. (Series 2024-1) issuance has also priced at the low-ends of already reduced guidance.

The pricing for this latest SageSure linked catastrophe bond is particularly keen, with one tranche seeing its price fall around 17% from the initial guidance mid-point, the other seeing a spread equivalent fall of around 14%.

As a result, the execution for this latest catastrophe bond for the SureChoice Underwriters Reciprocal Exchange and the Elevate Reciprocal Exchange looks particularly strong.

When this cat bond launched to investors in February the target was for up to $200 million in protection.

As we later reported, the target size was lifted to up to $250 million, while the price guidance was reduced.

With everything now finalised, Gateway Re Ltd., a Bermuda domiciled SPI, will issue two tranches of Series 2024-1 cat bond notes that will provide the upper-end target of $250 million of reinsurance across the two layers  of notes, to the covered reciprocal exchanges.

The notes will provide the cedent reciprocal exchanges with $250 million in indemnity trigger and per-occurrence structured named storm reinsurance, with one tranche providing one wind season of protection, the other offering cover across three seasons, initially for losses in Alabama, North and South Carolina, Louisiana, Mississippi, and Texas.

The first Class AA tranche of notes will run up to a maturity date of July 8th 2027 and have an initial expected loss of 1.1%, while they were first offered to cat bond investors with spread guidance in a range from 6.25% to 7%, which was subsequently lowered to 5.5% to 6.25%.

We’re now told this Class AA tranche of notes have secured the upsized $100 million target size, while their price has been finalised at a spread of 5.5%, so the bottom of the reduced range and around 17% below the initial mid-point.

The second Class A tranche of notes will provide single wind season coverage, running to December 23rd 2024,  and have an initial expected loss of 1.47%. They are structured as zero-coupon bonds and were first offered to cat bond investors with price guidance in a range from 90.75% to 91.75% of par (representing a rough spread equivalent of 8.25% to 9.25%), while that pice guidance was later updated to 92.5% to 91.75% of par pricing offered (representing an updated rough spread equivalent of 7.5% to 8.25%).

We are now told this one-year Class A tranche of zero-coupon notes have been finalised at the upsized $150 million target, while their pricing was finalised at 92.5% of par, so for a rough spread equivalent of 7.5%, again at the bottom of already reduced guidance and representing a roughly 14% decline from the mid-point of the spread equivalent price guidance.

Again, this is a particularly strong result for SageSure and the two reciprocal exchanges and the sixth of the Gateway Re cat bond series, that cover a range of underwriting entities linked to the SageSure MGU.

You can read all about this new Gateway Re Ltd. (Series 2024-1) catastrophe bond and every other cat bond deal in the Artemis Deal Directory.