Q4 2019 Earnings Call

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Ladies and gentlemen, thank you for your patience. Please remain on the wine while we gather additional participate again, we do appreciate your patience. Please remain on the wind at your conference will begin momentarily. Thank you.

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Good day, ladies and gentlemen, and welcome to your Oxbridge Real Holdings fourth quarter 2019 earnings results call. All lines have been placed into listen only mode and that's what will be open for your questions. Following the presentation, it's easier to acquire assistance during the conference. Please press Star zero.

On your telephone keypad to reach a life operator.

At this time it it's my pleasure to turn the floor over to rent than Timothy Chief Financial Officer, Sir the floor is yours.

Thank you operator.

During today's call will still be forward looking statements made regarding future events, including which reached your financial performance.

These forward looking statements on the it puts you into a private securities litigation reform.

Tonnage place.

Words, such as anticipates estimates expects intends plans projects and although symbol Bluetooth and expressions front end to signify important to compete.

Well the compete much guarantees of future results on conditions would rather subject to be arrests risk.

Some of these risks and uncertainties identified in the company's filing.

Yeah correctly deal these risks.

Do you could probably material.

The company's business one vessel condition on results of operation any forward looking statements made on this conference call to speak well yards all the detail just come from school.

Except as required by law the company undertakes no obligation to update any forward looking statements come to you don't disclose point any company presentation, you have the company its execution when do we need to compress conditions will circumstances change no I would like to turn the call. Once we won't chairman President and Chief Executive Officer, Jim I just.

Right.

Thank you Brenda and welcome everyone. Thank you for joining us today.

You got five times with all that is happening speaking about.

This year, while difficult with 19, all the Corona bars.

Consequences.

Well the alarming right.

Like to point out our goal reinsurance implications for Oxbridge.

We are as people are stable Stacey.

As we do each quarter before we got to our results I would like to take a moment to provide a brief overview our company Oximetry Holdings limited was founded over six years ago, but the mission to provide reinsurance solutions, primarily the property and casualty insurers in the Gulf Coast region, the United States through our license reach on subsidiary Oxbridge reinsurance limited.

License Riyadh short cycle ostrich re and that's really fully collateralized policies to cover property losses, but specific accounts repeats.

If you already know because you're right fully collateralized contracts were able to compete effectively but larger carriers. We specialize an underwriting loss frequency hikes will be already addressed radical leaves sufficient data access to effectively out of likes the risk return profile of reinsurance contracts. Our objective is to achieve long term growth and book value per share.

By writing that's that's what selective.

An opportunistic basis, but we will generate attractive underwriting profits relative to risk.

Regarding our investment portfolio, we remain optimistic deploying our capital what favorable return opportunities arise, which we believe in truck drivers all store supplemental investment income.

Being set our focus on top priority remains profitable underwriting.

Looking at twice the 19, the net loss experience a puppy 18 will significantly reduce we effectively broke even the last two quarters off the Europe I don't think you're at our key financial ratios the old stressed that compared to be 2080.

I'll give stands at $1.40 per share.

And our risk management underwriting focus allowed us to run bad unaffected by the devastation caused by Hurricane Doria other global catastrophes.

Yeah. They show 20 like T. What the second yard operations for our wholly owned subsidiary Ostrich <unk>, Yes, our reinsurance sidecar.

While the contract your ads on May 31st Lucky 20 outside our investors are on track to earn a crack that we're trying to watch roughly 40%.

We look to grow that portion of our business again this upcoming season, beginning June one twentytwenty.

I'll turn things over to run it does take a strong financial results for the fourth quarter and Youre at the December 31st truck the Nike right. That's.

Thank you.

The point to know what you thought typically contributed is from June to want to meet city first before the India.

With respect to net premiums earned net premiums written for the fourth quarter soft went to 19 reduced to 245 sold from 1.5 million into fourth quarter of 12 to 18.

The decrease was what do you do to significantly lower copper still get deployed this year when compared to prior you wouldn't be experience an acceleration of freedom recognition due to limited losses on all four reinsurance contracts nothing else then for the year ended pretty for December 2019 reduced to 617, so from 2.7 million.

Last year. The decrease was primarily due to look up so being deployed during the year compared to the break.

And then investment than on the income for the fourth quarter two into 19 to those what do you.

What do you feel though the change in the fear body of equity Securities. This compares with 86 Goldman from net investment income hosted by if what do you seldom change in field, while Youre stuck with securities and Eaton felt most net realized investment losses for the fourth quarter Oftwenty each.

Well. The you ended December 31st went to 19 net investment income totaled 200 him to do so.

So we thought was not net realized gain of 25 doesn't change and a few of August equity Securities. This compares with 300 optics is it still.

Net investment income boasted by 26 Stoughton of change and free up all your equity Securities on 200 intra trade sold off net realized investment losses into went to eat.

Well to be into quarter. One year ended you simplicity first went to 19, we recognize the gain a 100 optic spoken on successful completion of two reinsurance contracts. This compares with the most of it does not commutation during 2018.

<unk> expenses for the fourth quarter off to a tonight.

Loss and loss adjustment expenses policy acquisition cost and underwriting expenses on general and administrative expenses were 282000, compared with 10.5 million into fourth quarter 20 eating.

The decrease in expenses, what do you see decreasing policy acquisition cost and all the writes an expensive I was the result of decrease in net premiums earned during the quarter I was without the decrease in general and admin expenses due to for the cost saving initiatives implemented by the company when compared to the prior years fourth quarter for the year end.

Simplicity for too much in 19 total expenses were 1.1 million compared with 11.6 million in 20 eating the decrease in total expenses was primarily due to no losses included it went to 19 computer would limit losses incurred.

I will reach once before doing 20 eating that's where that's of course you went initiatives we implemented.

Yeah.

We generated a net income of 61 told no one central basic and diluted share for the fourth quarter off 2019 competed with you had net loss of 6.5 billion, we lost three cents pushing into fourth quarter of 28.

The significant improvement in the one net income was the result of no catastrophe losses experienced in the quarter competed with the trigger enough limit losses on board reinsurance contracts in the fourth quarter of 20.

Well the ended December 31st went to 19, that's both reduced significantly to when these 300 on price go well north of five cents basic and diluted common share competed with a little north of 5.7 million or one don't compete to come due to cut machine in 28.

Again, the significant improvement in Olin.

So to 19 was due to no limit losses experienced during the year compared to losses experience into indeed.

No turned into a financial ratios.

For the quarter ended December 31st with the 19, we use various measures to analyze the growth and profitability before business operations for reinsurance business measure underwriting profitability by examining all the loss ratio acquisition expense ratio underwriting expense ratio combine ratio well.

Let me show, which measures on the right to profitability.

The Reashure locomotive just wouldn't expenses incurred in the prudent soon.

Well loss ratio for the fourth quartile switched to 19 was your per cent compared to 589% for the fourth quarter off 20.

As mentioned, we experienced significant limit losses.

Last year's fourth quarter for the ended December 2019 loss ratio was also zero percent compute the loss ratio of 269% into into eating the improvement is due to no losses will also just an expensive.

In 290.

Well acquisition cost ratio, which measures operational efficiency competes policy acquisition cost and auto underwriting expenses than that premiums. Good luck with this of course, we shouldn't make blinked, 4% for the fourth quarter. What went to 19 competed with 11% last year.

For the year ended the simplicity for stuck in making that would sort of course, Russia was 10.4% competed with make sense in 28.

The increase in opposition Coordthree shoes, but due to overall higher we did I booty acquisition cost one regions can trust in force into into my team compete to defray yes.

<unk> expense ratio, which measures operating performance competes policy acquisition costs and general <unk> administrative expenses with net premiums good.

The expense ratio was 151% during the fourth quarter with went to 19 compared with 27 books to put in for the fourth quarter with EG.

For the year ended December 31st went to 19 the expense ratio was 183.3% computing, 41.5% for the year ended December 31st went to eat.

The increase in the expense ratio into it to 19 was due primarily to the one that premium Scotland and.

Net income from derivative instruments during the quarter and you ended December 31st want to 19, new when compared with the scene periods a year ago.

Well combined ratio, which is used to measure underwritten performance because of some of the lottery show on the expense ratio. If the combined we should is well above 100% underwriting isn't a profitable.

Combined we should totaled 115.1 person for the fourth what they'll start to 19 compared to six centered on 16.5% last year for the year ended December 31st going to 19. The combined ratio was 100 eats do 83.3% computer was 300 up 10% 20 <unk> the decrease in the combined we show.

I just want to my team was primarily due to no losses mean stuff when do you intend to 19 when compared it to the previous you.

Note that into the balance sheet.

Total investments, which include investments being fixed maturity and equity securities to talk to centered on makes two fold somebody. Some busted first went to 19 competed with 1.2 million I'd be simplicity for went to 80.

Total shareholders' equity at December 31st want to make it was <unk> million compared to 8.3 million at December 31st with Eaton.

The simplicity for a bunch of 19 current book value per ship stood at $1.40 cents.

At December 31st want to 19 caution caution coupons unrestricted cash and cash equivalents totaled 8 million compared with 11.2 million December for beef was 28, you know with that I'd like to turn the call about what to Jay Jay.

Thank you Brenda during the third quarter of what the 19, we experienced a major storm hi, Ken Dorian Backtrack devastation and how much was a category five hurricane before making landfall in the United States. Despite this event, having significant estimated insured losses at its highest 8 billion, we are not being impacted by this event.

Through our reinsurance sidecar, we have been able to add a degree of diversity to our revenue streams and risk.

While still having the ability to achieve attractive returns as mentioned before while the contract. Your ends on May 31st Twentytwenty psychotic investors are cracked on an attractive return of approximately 40%. We will look to grow that portion of our business again. This upcoming season, beginning June one cookie 20.

Going forward, we remain opportunistic about the long term prospects up not only our core business, but also our reinsurance sidecar, we continue to evaluate additional opportunities for growth as well as diversification risk.

So in closing we continue to reduce our general cost outside carton restaurants are attracted to attract a return of approximately 40% of book value per share is about 40, mostly in cash we aren't that free we have a strong cash position and most importantly, we help opportunistic opportunity a Bible business model without we are.

Ready to open the call for questions operator, please provide the appropriate instructions.

Thank you Sir the floor is now open for question if he would like to ask a question. Please press star one on your telephone keypad to join the queue and if you're using his speakerphone. Please pick up your handset to provide the best sound quality.

Again, ladies and gentlemen, if you do have a question or comment. Please press star one on your telephone keypad at this time.

And our first question comes from tens and Belsky with capital Securities. Please go ahead.

Thank you Hey, Jay ran an enjoyable times, where it and that's for sure [laughter] not so what do you <unk> what does the impact of the implosion lapel pandemic bond market as well as just the [laughter] it'd be the pricing on reinsurance contracts, you're seeing all these incredible event in Korea.

From the yield because of lack of competition for reinsurance copy of contracts.

Oh, Yeah work were sharing we're hearing something we're definitely kind that that's a slight increase from last year and everything that's going on and the capital markets doesn't doesn't help that oh on the other side. It's good for us in terms of pricing. However, it's dots to be seen.

Our preliminary indications our contracts up for affected those have gone up so I've gone up regardless, but it's a little probably for the layers that we participated to actually come up with an act accurate number at this point.

Yes. These are definitely interesting types.

It is [laughter] yeah. It is we want to things about Oxbridge of course in some regards your insensitive to economic behavior jets sensitive to actually got any comments about a anything about the I'd say a with the herrick upcoming hurricane season in years past.

Yes, I talk to you have talked at length about that can you add any color on that just you know statistically and yeah readily acknowledging that this is just so I'm statistics.

Yeah.

Statistically Yeah, let me take a look at where they take a look at the American history. Since 1951 liking 52 to now we see that we don't have Hurricanes every single yarn in Europe, and if you just take a very short term look are very short come due over the last 14 years two out at the last 14.

In years be hurricanes have rep topic, so hey, it needs to be a hurricane that's not only did not quarter, but it needs to make last fall be went back hurricane makes landfall it needs to be in a category tree or about to do the devastation and to rip roof, Synching goes and so on and so forth.

Unless you have it unless you have a really hard unless you haven't really big hurricane.

These hurricanes don't impact layers. They don't go through that they don't go through People's reinsurance towers and so on so.

In the last 14 years Oneq two out of the last 14 years, we've seen magic devastation and the market.

So.

Hopefully this year will be while those years, where we escape again, but we don't rely just on the fact that Oh.

It's a flip a coin type of thing we take a look at statistical data, we take a look at the contracts we make sure that the risk is appropriately priced.

In the past we have we have stopped all contracts are stepped away from contracts because we didn't feel the pricing was right or the timing was right. This year. This past year, we took a very conservative approach on on on going into the market and we deployed very little capital. This year, we worked on growing our sidecar business.

And as we go forward, we'll take a look at pricing and we'll take a look at the market will take a look at the site carpets nest and deploy appropriately.

Appreciate it thanks.

Thank you got.

And our next question comes from Harry salaries with Southworth value partner. Please proceed.

Hi, Jay Thanks for taking your time to have this call today.

Thank you very yeah. So based on your 10-K, a worsening mostly in cash as you would restaurant.

And clearly you're getting favorable premium space. So my mouth to the risks that you Rawlins Schering I do have a concern with that.

And part of the 10-K, we're at about a little over 8 million in cash restricted cash is that correct.

Yes.

As you said, we had virtually no debts.

What is our plan to do.

Deploying that cash to enhance shareholder value.

Yeah. We asked me go forward, we do have some cash we do have some cash in a few securities and things like that and depending on depending on the market depending on situation.

Well make a well make a decision whether to put that money to use or not I can comment what this for this quarter, but everything over here is based off of last quarter.

Sure.

But I think in times like this.

It's very valuable to note that word that free and we have cash.

Yes, I'm I've always been a fan of oxfords cash position.

The cash rich, especially in times like this we have these credit crunch is I mean, I'm I'm sure you're aware of the importance of that cash position.

My one right or.

Just a little concern is that we're trading at 76 cents a share right now.

Against almost double that in cash net of all liabilities.

So to me.

Right, especially given that we don't have very steep net losses and aren't quite close to breakeven I told me its docket severely undervalued.

How do you or the management team ever considered a undergoing a buyback at such depressed levels.

Yeah no at this point now I'll give you the cannot answer right. This is something at the kind of answer is it'll be depending on board of directors meeting on what the board decides but sure.

Depending on situation, depending on what's decided and matters of had I think as you mentioned cash is king at this point Oh, we see some gyrations in the stock itself.

The socket, you know stock as Bob stop and come down and so on and so forth, but yeah. The southern accent. So thats trading is that a significant discount to book books of dollars 40, which has primarily in you know predominantly in cash cash and cash equivalents. So we're creating a huge discount.

So wed like to watch all the board that I personally Oh really enjoy buying dollar build the 50 cents piece.

Yes, [laughter], yeah, but it's a at this point at this point that I woke, we'll consider your we'll consider all options a thoughts and so forth, but there is a possibility that they may be better things to put our monies to work, but at some point you are right.

They come down to the possibility of a share buyback, but that would be decided in future bosh.

Where wherever we find yeah wherever we find some significant opportunity.

Yes, and in our in our sidecar that we are developing and sidecar because pretty much open to anybody who is an accredited investors.

And I know, it's not adverse to risk so being that our company is there's an offshore entity that maybe something that maybe some tax benefits for somebody looking at that because it's not a multiyear.

Congrats with a one year out, but there is a possibility for folks to take a look back and orange soured from very attractive returns.

That money is split.

Monies put alongside our company money and put to work and reinsurance contracts.

All the same time, none of that money is exposed to the capital markets, we talk to juice to try to Joe's return, we don't go and buy stock in equities and so on and so forth. So that's the what part of our business that we're very excited on and we look to grow.

And what what what kind of cash is not going to require to grow.

From the standpoint of the common stock above all oxbridge.

Initially back money initially thought raises wants to be a very small race, especially.

Especially what's going on in the market at this point that remains to be seen by truck, we believe going forward I'm getting the future because dot money come said.

Well, we are basically acting as a money manager in reinsurance contracts, we have a very small we have a very small number as a management fee that we take a there's no other expenses that come out of that and we we turned around and take a percentage of the profit. So somebody somebody who doesn't want to go set up there on reinsurance company it doesn't want to spend.

The right.

The answer box that that's involved at plus in order to get contract you really have to be it's insurance industries to begin with isn't so barrier to entry is very high but somebody can somebody can invest there that cash alongside us.

So all at the same time get a significant returns now there is risk, but it's sort of cardboard.

Well I'm definitely a fan of expanding aside car business that was among a few other things one of the key things that drew me towards Oxbridge several months ago.

Oh I do a one last question for you and that is it your congratulations first on continuing to decrease your general and admin costs.

But we are still wondering about as much in that area. As we are taking in queens, Fortunately, it's not that breakeven level.

But would you be able to offer any guidance on when do you expect to return to profitability.

Yeah, we're working we're working diligently to it towards that.

Where we're big fan off not trying to.

Act rationally or or after all around the insurance flash reinsurance business right. So we caught everybody to manage that risk.

Coming out of two seasons off of up to malicious times is not the best sometimes to take to take a ration make rational decisions and make you know take I've got too much risk. So to answer your question, we evaluate contracts at the same time, we take a look and see how the contractor.

Our oh priced and if the risk is adequately priced we've taken but going forward, we believe not only our core business off taking on risk, but also outside car business will augment the us towards getting back to where shareholders would appreciate where we are.

Right My concern is a little bit more on the expenses side, rather than a top line there because I've always saying you've done a great job managing the topline.

In the expenses that are falling.

Right I would add to shareholder I really like to see those all.

Below the premiums or.

What are our you know our expenses are.

There's not much more we can cut in terms of expenses by right. We.

Noted and well continue to we'll continue to evaluate that.

All right I appreciate that and again I'm no timeline for expecting a return to profitability there.

No as I mentioned it all depends on what the situation I had us.

All right and don't get me Lucky to be all we're all working towards that second goal.

Yes.

Just a.

Don't have necessarily exact timeline, given the state of the markets and catastrophic events I understand.

Yes.

Alright. Thank you Jeff that's all I have thank you how are you appreciate the call.

And that does conclude our question and answer session for today I'd now like to turn the call back over to Mr. might do for his closing remarks.

[noise]. Thank you for joining us on todays call I, especially want attack. Thank our employees business partners and investors for their continued support we look forward to updating you on our next call. If you have any further questions. Please give us a call anytime.

Thank you for your type.

Got it stay safe.

And that does conclude todays teleconference. We appreciate your participation you may disconnect. Your lines at this time and have a great Dane.

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