Oxbridge Re Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 12, 2025

There are 3 speakers on the call.

Operator

and welcome to Oxbridge Re's First Quarter twenty twenty five Earnings Conference Call.

Operator

My name is Robert, and I'll be your conference operator this afternoon. Joining us for today's presentation is Oxbridge Re's Chairman, President and Chief Executive Officer, Jay Madhu and Chief Financial Officer and Corporate Secretary, Brendan Timothy. Following their remarks, we will open up the call for your questions. I would like to remind everyone that this call will be available via telephone replay until 05/26/2025. Details for telephone replay are included in the press release issued today.

Operator

Now I'd like to turn the call over to your host, Brandon Timothy Timothy, chief financial officer of Oxbridge Re, who will provide the necessary cautions regarding the forward looking statements that will be made by management during this call. Thank you, operator. During today's call, there will be forward looking statements made regarding future events, including Oxford Re's future financial performance. These forward looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as anticipates, estimates, expects, intends, plans, projects and other similar words and expressions are intended to signify forward looking statements.

Operator

Forward looking statements are not guarantees of future results and conditions, but rather are subject to various risks and uncertainties. A detailed discussion of the risks and uncertainties that could cause actual results and events to differ materially from such forward looking statements is included in the section entitled Risk Factors contained in our Form 10 ks filed on 03/26/2025 with the Securities and Exchange Commission. The occurrence of any of these risks and uncertainties could have a material adverse effect on the company's business, financial condition, and the volatility of our earnings, which, in turn, could cause significant market price and trading volume fluctuations for our securities. Any forward looking statements made on this conference call speak only as of the date of this conference call. And except as required by law, the company undertakes no obligation to update any forward looking statements contained on this call or in any company presentation, even if the company's expectations or any related events, conditions could to consent this change.

Operator

Now I'd like to turn the call over to our Chairman, President and Chief Executive Officer, Jay Mader. Jay? Thank you, Brendan, and welcome, everyone. Thank you for joining us today. Let me start by saying we are proud of the significant steps we have taken to fortify and diversify our business.

Operator

While we are solidly entrenched in the RWA web free space, where we issue to reinsurance securities in an RWA or real world assets, our core business remains reinsurance, where we write fully collateralized policies to cover property losses from specific catastrophes. And because we write fully collateralized contracts, we believe we can compete effectively with large carriers. We specialize in underwriting low frequency, high severity risk where we believe sufficient data exists to effectively analyze the risk return profile of reinsurance contracts. Our objective is to effect to achieve long term growth and book value per share by running business on a selective and opportunistic basis that will generate attractive underwriting profits relative to risk. Building on the stable reinsurance foundation, we began to diversify our business in 2022.

Operator

We expanded our business portfolio by establishing Shorts Plus Inc, a new subsidiary focused RWA web three technology. Shorts short plus specializes in democratizing tokenized real world assets or RWAs, offering tokenized reinsurance securities as alternative investment opportunities. These securities leverage blockchain technology to ensure complete transparency and compliance with SEC guidelines, representing a significant advancement in the digital security market. Consequently, this initiative aims to broaden investor participation, extending opportunities beyond what traditionally has been a select group of ultra high net worth individuals. Crucially, the establishment Assurance Plus was achieved without incurring new debt, reflecting our efficient approach to diversification.

Operator

Excuse We are we are enthusiastic about the prospects of these new investments and remain committed to keeping our share our stakeholders informed of their progress in the upcoming quarters. Looking ahead, we intend to position Oxbridge as a prominent player in the real world or RWA Web three sector. In summary, we maintain a strong sense of optimism regarding the long term outlook of our core reinsurance business alongside the successful integration of AssuranceClub as we embrace the RW market more competitively. I'll now turn things over to Rendon to take us through our financial results. Thank you, Jay.

Operator

I would like to remind you that our typical contract period is from June 1 to May 31 of the following year. And that's for the quarter ended 03/31/2025 increased to 595,000 from $549,000 for the quarter ended 03/31/2024. The increase is due to the rates, high recent contracts that were enforced in the quarter ended 03/31/2025 when compared to the contract enforced in the prior period. Our investment income and other income increased to 79,000 from 62,000 from prior first quarter. We also recognized a 35,000 realized gain on the sale of our other investment in Jet AI.

Operator

All these factors taken together resulted in total revenues of $692,000 for the three months ended 03/31/2025 compared to negative $125,000 in prior first quarter. For the three months ended 03/31/2025, total expenses, including policy acquisition costs and general and admin expenses increased to 500,000 from $548,000 for the quarter ended 03/31/2024. The increase is primarily due to the value of stock based compensation incurred during the three month period ending 03/31/2025 as a result of higher share price on Grant State. For the three months ended 03/31/2025, the company generated net loss of 459,000 or 2¢ per basic, and diluted loss per share compared to a net loss of 95,000 or 15¢ per basic, and diluted earnings loss per share for the quarter ending 03/31/2024. The decrease in net loss is primarily due to the positive change in the fair value of equity securities, the sale of investments in Jet EI during the quarter of June ended 03/31/2025 when compared with the prior period.

Operator

As we have discussed before in our investor call, we use various measures to analyze the growth and profitability for our business operation. For reinsurance business, we measure underwriting profitability by examining our loss ratio, our acquisition ratio, our expense ratio, and combined ratio. Our loss ratio, which measures underwriting profitability, is the ratio of loss and loss adjustment expenses, including the premium. The loss ratio remained consistent at 0% for the quarter ended 03/31/2025 compared with the quarter ended 03/31/2024. Our acquisition cost ratio, which measures operational efficiency compared to the policy acquisition cost net premiums earned.

Operator

The acquisition cost ratio remained consistent at 10.9¢ for the quarter ended 03/31/2025 compared with the prior year quarter. Our expense ratio, which measures operating performance compared to policy acquisition cost and general and other expenses were premium. The expenses should decrease marginally from 99.8 percent for the three month period ending 03/31/2024 to 95.8 for the three month period ended 03/31/2025. The decrease is due to higher net premium earned during the three month period ending 03/31/2025 when compared with the prior period. Our combined ratio, which is used to measure underwriting performance, is the sum of the loss ratio on the expense ratio.

Operator

The combined ratio also decreased marginally from 99.8% for the three month period ending 03/31/2024 to 95.8% for the three month period ending 03/31/2025. The decrease is due to higher net premium earned during the three month period ended 03/31/2025 when compared with the prior period. Moving to the balance sheet. Our investment portfolio increased marginally to a 16,000 at 03/31/2025 from a 15,000 at the prior year end, primarily due to the increase in fair value of equity securities during the quarter ended 03/31/2025. Cash and cash equivalents and restricted cash and cash equivalents increased by 3,700,000.0 or 62.8% to 9,600,000.0 from 5,900,000.0 as of December 2024.

Operator

The increase is primarily due to premium deposits made during the three months ended 03/31/2025 as well as the completion of a registered direct offering that generated 2,700,000.0 net of expenses. I'll now turn the call back over to Jay for wrap up before we take your questions. Jay? Thank you, Brendan. As highlighted earlier in today's discussion, we have implemented decisive measures over the last two years to strengthen and diversify our operations.

Operator

In December of twenty twenty two, we launched Assurance Plus with the objective of tokenizing securities representing fractionalized interest in reinsurance contracts underwritten by our reinsurance subsidiary. The second quarter of twenty twenty three, we successfully completed the initial offering of these security tokens known as Delta Cat 3 issued on Avalanche blockchain. Notably, investors in Delta Cat 3 achieved returns exceeding 49%, surpassing the initial 42% projections despite the challenges posed by Hurricane Adalia, which made landfall as a category three storm in 2023. We believe these are the first tokenized reinsurance securities backed by backed by a publicly traded company, an accomplishment that underscores our ability to lead through innovation. Insurance Plus was was established through the marketized access to reinsurance as an alternative investment, leveraging blockchain tech chain technology to create sophisticated digital securities.

Operator

Our security tokens are designed to offer broad broader investor participation, security, transparency recorded on the blockchain. Using Reg D and Reg S frameworks, investors can seamlessly compete complete AML KYC and document signing requirements accessing this historically exclusive asset class within minutes. By lowering the financial barriers that have traditionally restricted access to reinsurance, we are making this asset class accessible to a wider range of investors. As part of our commitment to growth and industrial leadership, we have actively participated in key global tokenization of blockchain events. This includes consensus twenty twenty four in Austin, Texas, Token 20 40 9 in Singapore, and token twenty forty nine in Dubai, where we engage with industry leaders, innovators, and and investors.

Operator

Our presence at these forms allowed us to showcase Shortz Plus, strengthen business relationships, and explore collaborative opportunities with prominent blockchain platforms. In addition to our core operations, Oxford Re has initiated a strategic review process forming a special committee on the board to explore a full range of strategic alternatives for the company and its Web3 division, Shortz Plus Holdings Limited. These alternatives may include sales, spin out, merger, divestiture, recapitalization, or continuing to operate as a publicly traded entity. In q one twenty twenty five, our board of directors approved the inclusion of Bitcoin, Ethereum, potentially other cryptocurrencies as part of our corporate treasury reserve strategy. This decision aligns with our commitment to innovation, diversification, and long term value creation recognized by the growing global adoption of blockchain based assets.

Operator

We recently announced a memorandum of understanding or MOU with Plume, a leading blockchain platform supporting 4,500,000,000.0 in assets and more than 18,000,000,000 unique wallet addresses. This relationship has the potential to significantly expand distribution channels for our tokenized resource offerings, enhancing our presence within the RWA ecosystem. While we continue to explore additional strategic relationships, this partnership highlights a commitment to growth. Building on a pruned MOU, we remain focused on identifying and forming additional strategic partnerships to accelerate our growth in RWA tokenization and Web three infrastructure. These alliances will will enhance distribution capabilities and strengthen investor access for innovative digital securities.

Operator

As of now, we do not anticipate any material impact on Hurricane Helene. Regarding Milton, we continue to monitor the developments and avail finalized data. Our disciplined approach to risk manager positions us to navigate market dynamics with confidence. Looking ahead, we are pleased to highlight our 2025 and twenty twenty twenty twenty six tokenized reinsurance offerings, which include two distinct options. A balance shield tokenized security targeting a 20% annual return designed for investors seeking stable attractive yields with moderate risk and a high yield tokenized security targeting 42% annual returns, offering a high offering a higher risk reward profile.

Operator

This two tiered structure expands our product suite, catering to a broader range of investor preferences and furthering our mission to make institutional grade reinsurance accessible through blockchain powered real world assets. Recent industry reports, including those from Standard Chartered and Sunflush, forecast specific growth in tokenized asset market potentially reaching 30,000,000,000,000 by 02/1934. As a pioneer in this evolving landscape, we are well positioned to capitalize on this growth, leveraging our expertise and first move advantage. Our achievements today reflect a clear vision and disciplined approach to execution. With a strong balance sheet, innovative products, and expanding strategic relationships, we are well positioned to drive sustainable growth and create long term value for our shareholders.

Operator

With that, we are ready to open the call for questions. Operator, please provide the appropriate instructions. Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad.

Operator

A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Kent Pangolke with Capital Securities Management.

Operator

Proceed with your question.

Speaker 1

Randy. Hey, Jay. How is the marketing going on for the tokenized securities? And secondly, you said it's about a $30,000,000,000,000 market. How much do you think that you all could capture of that market?

Speaker 1

And obviously, the market is in its infancy. Is there any correlation back to the catastrophic bond market that they started tried to create an ETF? Is there any correlation back to the cap market there?

Operator

Hey, Sam. Thanks for the question. Marketing efforts are going fine. What we've been targeting though is two sides of things. Right?

Operator

Number one is the marketing, but also we've been coupling this with outreach. Getting we we currently find ourselves in somewhat of a no man's world, so to speak. So while we are a traditional finance SEC company, we are also going into the RWA space or the web three or RWA tokenization aspect of it. We find ourselves in the middle of both worlds. So moving more towards the RWA space, attending the various different conferences, striking relationships with the various different players in the space, we are finding that we're getting more adoption and more more acceptance in that space because that's the space we are pivoting towards.

Operator

It's it's like turning up it's like turning a battleship, not a speedboat. And I think we're doing that quite well. So we've been focusing a lot in both directions because as we grow into Assurance Plus two point o, I think it's critical that we get more adoption in that side of the world, right, in that piece of it. So I think we're doing well with that. As far as the $30,000,000,000,000 business opportunity over here, the size of company we are currently, even if we got even if we got a small and very minuscule piece of that, that's that's a game changer for us for the insurance plus.

Operator

So we continue effortlessly to move forward, and I believe we're making some good progress.

Speaker 2

Great.

Operator

As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Allen Klee with Maxim Group. Please proceed with your question.

Speaker 2

Yes. Hi. I'm so sorry. Is it pound one, not store one. So figure that out.

Speaker 2

Okay. Congrats on a solid quarter. Just following up on the last question on on the marketing for the tokenization. Could you tell us how to what we should kind of look for in terms of information we we could be hearing in the next, you know, next three to six months?

Operator

Yeah. Hi, Alan. Thanks for the question. I I think I think we're making some good progress. Well, time will tell.

Operator

We're not there at the end of it, but I believe we should be in good shape in terms of in terms of this next this next token launch. So as as as you're well aware, we have two sides of the token, two sets of tokens. One is our balance shield, and one is our one is our high yield token. The high yield, we've traditionally offer that, and then you're we target a 42% return. But what we're finding is there's there's a much larger audience out there that is that is probably looking for a more sustainable balance yield.

Operator

And that's where you come out with our balance yield token of the 2020% token. So while it's not while it's not completed, while we're not at the end of the situation, I think we're time will tell, but so far so good.

Speaker 2

That's great. And then talk a little about just the reinsurance market if how you're feeling about the kind of premiums and underwriting and then kind of the potential return? Just how you're thinking about the overall health of of the market that you're pursuing.

Operator

So the I'll I'll talk about the health of the market first. Right? So I I think from what we're seeing and what we're hearing, premiums are you know, premiums seem to be in various different directions. And we still have we're still working through finalizing contracts and so on, and we won't know that till probably the end of the month. But all directions are, you know, solid contracts, solid opportunities, solid premiums.

Operator

In terms of in terms of underwriting, what we've also seen now, majority of the business that we write is in the state of Florida and the and the various different things that Florida has implemented towards their underwriting their underwriting situations of the AOB, which is assignment of benefits, etcetera, is playing out well in the in in in situations as it comes to claims. So in years gone by with with, you know, even of these hurricanes that have gone through, it would have been a vastly different situation. Currently, with all the different changes that have come about in the it it with the OIR has put through and the state of Florida has put through, it's boarding well for the various different insurance as well as reinsurance companies. So, again, we don't have we don't have anything we don't have pure clarity as to where this goes. But so far, we have not been affected.

Operator

So I take solace with that. It doesn't mean we don't get we we don't get an email tomorrow or today after this call. Right? But so far, good. But at the end of the day, the marketing or the market that we're after is the high yield token.

Operator

You don't get a 42% return without taking risk. So this is something that every now and then will get affected. But traditionally, since 1952, '80 '2 percent of the time, you don't have a category three hurricane. And sometimes in actually, the last couple of years, we did have a category three hurricane, but it didn't make landfall. So a category three in Florida, it needs to make landfall, and it needs to hit a populated area.

Operator

So looking at these various different things, majority of the time, nothing happens. But sometimes when it does happen, it could go wrong. So then that risk reward with a 42% return token. So while we have that, it's a risk that is known, and it's a risk that is acceptable. The balance sheet of token, what we're being told had the balance sheet of had we had a balance sheet of token last year, that would be a nonevent at the moment.

Operator

So how things go are to be determined, but we are confident in where we are in the in the turn of the business in turning this battleship, moving from the crash fire, the traditional finance business to the RWA or web three opportunity business, where we are taking an additional capital almost like the hedge fund model and putting it to work and getting capital as we go forward, attempt to get capital from anywhere in in the world where we can do proper AML and KYC, put that money to work. It it's it's a great thing for our business. Now two things will come from that. One, we, the company, will have access to additional capital and put more money to work and get get and and grow the business opportunity together. But the flip side of things will be as additional capital comes in to the RWA space, into the tokenization space, and more capital comes into the reinsurance space through tokenization, a few different things will happen.

Operator

A, the companies that are doing that will do well, but also the the homeowner or the policyholders will achieve a slightly better rate as they go forward because there's more capital coming into the ecosystem of reinsurance. It's a win win on both sides.

Speaker 2

Makes sense. Yeah. And I no. I've looked at I'm sure you know well too. Some of the companies that have reported that that do insurance in the in levered to Florida for their first quarter, good numbers and good outlook.

Speaker 2

So that's encouraging. In in terms of the partnership you talked about, could could you that sounds like that could could be a good distribution channel. Could you talk a little bit more about how this actually works?

Operator

Yes. So the MOU that we signed with Plume, that could be a very good distribution channel because they have a highly evolved ecosystem. So while we have Plume, we we run token $20.49 in Dubai, and we were on a panel invited by Midnight. Midnight is a new chain that's coming out. It's born from the Cardano chain.

Operator

We were invited by the folks from Midnight, and we were also and the folks from BitGlover also on that same panel. So we are making some strides to where before we, you know, we were standing from afar looking in the inside. Now we are making some strides with with some of the larger players in the ecosystem where they are recognizing there there is a marked difference between crypto as as opposed to tokenized securities. So moving forward, I think we are in great shape in terms of in terms of the various different folks that we are working with. That's Assurance Plus two point o.

Operator

We're evolving. We're moving more into that section. But while we are moving more in that direction, we are working within the framework of what the SEC allows us to do, the dos and don'ts. We're very careful to make sure that we that we color within the lights.

Speaker 2

That's great. Okay. Thank you very much.

Operator

Thank you. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment please while we poll for questions. At this time, this concludes our question and answer session. I'd now like to turn the call back over to Mr.

Operator

Mahou for closing remarks. Thank you for joining us on the calls today on the call today. Before we conclude, I would like to extend my gratitude to our employees, business partner, and investors for their unwavering support. I particularly want to acknowledge our dedicated Oxbridge team whose extensive experience, expertise has been instrumental in navigating and advancing our business, admit admit amidst these challenging circumstances. We we anticipate providing you with further updates on our progress during our next call.

Operator

And should you have any additional questions, please do not hesitate to reach out to us anytime. Once again, thank you for your time and attention today and for your ongoing interest in Oxbridge. Operator? Before we conclude today's call, I'd like to remind everyone that a recording of today's call will be available for replay via a link available in the Investors section of the company's website. Thank you for joining us today for our presentation.

Operator

You may now disconnect.

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Key Takeaways

  • Oxbridge Re reported first-quarter 2025 revenue of $692k versus a –$125k loss in Q1 2024 and improved its underwriting combined ratio to 95.8%, supported by higher net premiums and a registered direct offering that boosted cash to $9.6M.
  • In 2022, the company diversified by launching Shorts Plus (Assurance Plus), a debt-free subsidiary focused on democratizing tokenized real-world assets (RWAs) and tokenized reinsurance securities via blockchain.
  • Oxbridge Re completed its inaugural Delta Cat 3 token offering on the Avalanche blockchain in Q2 2023, delivering >49% returns to investors—exceeding the 42% target—even after Hurricane Adalia’s landfall.
  • A newly formed special committee is conducting a strategic review of Oxbridge Re and its Web3 division, evaluating options including sale, spin-out, merger, divestiture, recapitalization or continued public operations.
  • The board approved adding Bitcoin and Ethereum to its corporate treasury and signed an MOU with blockchain platform Plume to expand distribution channels for its tokenized reinsurance products.
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Earnings Conference Call
Oxbridge Re Q1 2025
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