Coastal property insurance underwriter SURE, or the SureChoice Underwriters Reciprocal Exchange, is seeking its debut catastrophe bond, with a new $150 million US wind focused Gateway Re Ltd. (Series 2022-1) transaction now launched to investors.
SureChoice Underwriters Reciprocal Exchange (SURE) is a relatively new coastal property insurer in the United States, that distributes its policies through a partnership with SageSure Insurance Managers.
We’re told that a Bermuda domiciled special purpose insurer (SPI) has been established for this first catastrophe bond from SURE, with Gateway Re Ltd. having been registered in March.
Gateway Re Ltd. will seek to issue a single tranche of Series 2022-1 Class A notes that will be sold to catastrophe bond funds and investors and the proceeds used to collateralize a reinsurance agreement between the SPI and ceding company SURE.
The target size for this first Gateway Re cat bond is $150 million and once issued the proceeds will provide SURE with a three-year source of US named storm and hurricane protection, initially focused only on the Gulf Coast states of Alabama, Louisiana, Mississippi, Texas, we understand.
The Gateway Re cat bond will provide the SureChoice Underwriters Reciprocal Exchange with named storm reinsurance protection on an indemnity trigger and per-occurrence basis across three full Atlantic hurricane seasons.
The $150 million of Series 2022-1 Class A notes Gateway Re Ltd. will issue, will have an initial attachment probability of 2.73%, an initial expected loss of 1.68% and they are being offered to cat bond investors with coupon price guidance in a range from 7.75% to 8.5%, our sources said.
This is yet another first time sponsor for the catastrophe bond market in 2022, another positive signal, while it also demonstrates the appetite of coastal writers to fill upper-layers of their reinsurance towers with capital markets backed capacity.