Gateway Re Ltd. (Series 2024-3)

The SureChoice and Elevate reciprocal exchanges, that are linked to expansive coastal MGU SageSure, are back for what will be their third catastrophe bond of the year.

This time they are seeking an up to $100 million source of multi-year named storm reinsurance protection from the capital markets.

Bermuda-based Gateway Re Ltd. is the issuer of choice for this latest catastrophe bond to support the reinsurance needs of the SageSure linked underwriting entities.

Gateway Re Ltd. will issue a single tranche of Series 2024-3 Class AAA cat bond notes, with a target to secure between $50 million and $100 million of reinsurance, we are told.

These notes will be sold to catastrophe bond funds and investors and the proceeds will collateralize reinsurance agreements between the SPI and the ceding entities, which are the SureChoice Underwriters Reciprocal Exchange and the Elevate Reciprocal Exchange.

The Class AAA Series 2024-3 notes issued by Gateway Re Ltd. are set to reinsurer the reciprocals against losses from named storms affecting the US states of Alabama, North and South Carolina, Louisiana, Mississippi, and Texas.

Like the 2024-1 cat bond, we are told that at a reset, additional states of New York and Virginia can be added to the coverage, at the cedents request.

The notes will provide a multi-year source of indemnity trigger and per-occurrence named storm reinsurance, with the term set to be three years to July 8th 2027, we understand. This is the same maturity date as the 2024-1 first-event cat bond, so aligns the coverage from this new deal.

The Class AAA tranche of notes will have an initial attachment point at $1.376 billion of losses, exhausting at $1.576 billion, sources said.

Which gives the up to $100 million of Class AAA notes an initial attachment probability of 1.28%, an initial expected loss of 1.16%, while they are being offered to cat bond investors with spread guidance in a range from 5.25% to 6%.

As a result, these new AAA notes sit higher up and span a wider layer than the two tranches from the Gateway Re 2024-1 deal.

Update:

We learned from sources that this Gateway Re 2024-3 catastrophe bond issuance has been cancelled, as the sponsors made a commercial decision not to proceed with placing the transaction, given market conditions at the time.