The Chief Executive Officers (CEOs) of both SageSure and SafePort Insurance Company have highlighted strong insurance-linked securities (ILS) investor support for the recently completed Gateway Re II Ltd. (Series 2023-1) catastrophe bond, which provides SafePort and SafeChoice Insurance Company with $125 million of capital markets-backed named storm reinsurance protection.
While SageSure has leveraged the catastrophe bond market in the past for the benefit of its SureChoice Underwriters Reciprocal Exchange (SURE), this is the first cat bond to benefit SafePort Insurance Company and SafeChoice Insurance Company, two carriers linked to the coastal property managing general underwriter.
As we’ve reported previously, the debut cat bond upsized by 25% while marketing, and also priced at the low-end of initial guidance, which is a strong outcome for the pair’s first entry into the marketplace.
The increased size of $125 million was successfully secured, while the Class A notes, which have an initial expected loss of 1.4%, priced to pay investors a spread of 9.5%, so at the lower-end of the initial price guidance range of 9.5% to 10.25%.
According to the companies, the deal was oversubscribed, reflecting SageSure’s established reputation with the ILS investor community.
Gateway Re II Ltd. (Series 2023-1) provides multi-year and collateralized reinsurance protection against losses for US named storms across Alabama, Louisiana, Mississippi, New York, North Carolina, South Carolina, Texas, and Virginia.
The Class A notes attach at $130 million of ultimate net loss, exhausting at $280 million, which the firms say sufficiently covers the remote loss scenarios based on the reduced cat exposure of SafePort’s portfolio.
Andy DiLoreto, CEO of SafePort’s management company, commented, “This newly formed cat bond program enables SafePort to meet the rising market demand for highly rated capacity in the states we serve by providing essential reinsurance protection. We appreciate the strong ILS investor support for the SafePort and SageSure partnership and our mission to provide dependable property protection.”
Terrence McLean, CEO and co-founder of SageSure, added, “Supporting our carrier partners in securing reinsurance capacity has been key to navigating a historically hard reinsurance market. The support from the global ILS community is gratifying, as is the fact that our track record of maintaining healthy and balanced portfolios continues to resonate.”
Swiss Re Capital Markets, part of the global reinsurer, acted as both the sole structurer and bookrunner for this debut cat bond transaction.
Commenting on the deal, Jean-Louis Monnier, Global Head of ILS at Swiss Re, said, “Swiss Re Capital Markets is proud to guide SafePort through its debut cat bond issuance and to see continued investor confidence in SageSure and its carrier partners.
“The successful execution for SafePort is evidenced by both the notional upsize and pricing at the low end of guidance. This demonstrates the strong investor appetite that exists for sponsors with an established track record and a cohesive underwriting and claims management strategy.”