Q3 2020 Oxbridge Re Holdings Ltd Earnings Call

Good afternoon, welcome to Oxbridge raised third quarter 2020 earnings call. My name is Jamie and I will be your conference. Operator. This afternoon. At this time, all participants will be in a listen only mode.

Joining us for today's presentation is Oxbridge Reed, Chairman, President and Chief Executive Officer, Jay Matthew and Chief Financial Officer, and corporate Secretary Wrendon Timothy following their remarks, we will open up the call for your questions I would like to remind everyone that this call is also being.

Cast live via webcast and available via webcast replay until Wednesday November 10th Twentytwenty, one on the Investor information section of the Oxbridge <unk> website at Www Dot Oxbridge REO Dot com now I would like to turn the call over to Brendon Timothy.

Chief Financial Officer.

<unk>, who will provide the necessary cautions regarding the forward looking statements that will be made by management. During this call. Sir. Please proceed.

Thank you operator.

During today's call there will be forward looking statements made regarding future events.

<unk>, Oh, <unk> future financial performance.

These forward looking statements I mean, she wants to the private Securities Litigation reform.

1995.

Words, such as anticipates estimates expects intends plans projects and other similar words and expressions.

Intended to signify forward looking statements forward looking statements I'm going to use a future results and conditions, but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the companys filings with the us.

The occurrence of any of these risks and uncertainties can hop in what you got.

On the Companys business financial condition and results of operation.

Any forward looking statements made on this conference call speak well above the date of this conference call, 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 the companys expectations or any religion events conditions, what's it goes off the street.

Page.

In addition on March 11, 2000, just went to the was her organization corrupt right outbreak of corporate Mike.

Pandemic.

No disruption of global commercial activities across all market sectors and the significant declines volatility in financial markets are the result of the COVID-19 bundling could result in a material.

<unk> financial position results.

<unk> cash flows.

Well the fix me include but are not limited to uncertainties with respect to current and future losses.

Reduction in interest recent equity market volatility.

On going business in financial markets in box economics don't.

The insurance industry is likely to experience material losses resulted from good thinking which will reduce the boat Cocteau Oh, we expect will help to sustain the upward pricing trend for reinsurance, but you'll see it across many lines of business before opening night.

For what the ultimate impact on current business in force, that's with us risk on potential opportunities on future business remains highly on.

Now I'd like to turn the call over to what Chairman, President and Chief Executive Officer, Jay Jay.

Thank you Brenda and welcome everyone. Thank you for joining us today over the last nine months, we experienced a was severely challenged by the COVID-19 pandemic. Our key goal. During these challenging times is to ensure the health and safety our employees at our community.

The pandemic, however has dropped I personally affected our business at this time.

Monitoring our markets on the insurance for industry.

Insurance industry in general and I will keep you posted on our progress during these difficult times we.

We are pleased however to return to normal business operations during the second quarter after bobs up disruption, while the operations and business remained stable as we work through as we work. We all worked remotely and it's good to get back to our offices and continue the college at work.

Working environment and culture of performance, we have developed over the years should things change in the future. We go to work toward working remotely to ensure the well being of our team.

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

But it had a licensed reinsurance sidecar Oxbridge re at S., we rightfully collateralize policies to cover property losses from specific catastrophes.

Sorry, if you already know because we rightfully collateralize contracts, we can compete effectively which locked with large carriers.

We specialize in underwriting low frequency high severity risk Robbie believe sufficient data exists to effectively analyze that risk return profile of reinsurance contracts. Our objective is to achieve long term growth and book value per share by writing business on a selective and opportunistic basis that will generate attractive underwriting profits relative to risk.

Regarding our investment portfolio, we remain opportunistic and will deploy our capital at favorable returns opportunities arise, which we believe will in turn drive our results through a supplemental investment income our focus on top priority remains our profitable underwriting.

In addition, we continue to make progress at the New York for our wholly owned subsidiary Oxbridge Riyadh asked us our reinsurance sidecar.

Contract, you're ending may 31st off Twentytwenty, a sidecar investors are not attractive return of approximately 36%. This.

This year if loss free it could be around the same I'll now turn over the call to ride that protect us raw financial results revenue. Thank you Jay was the point to note is though a typical contract period is from June one to mute city one of them for you with respect to net premiums written for the quarter on the premiums declined slightly to 47.

Feldman from some things open last year, you too little capital deployed in the period compared to last year net premiums written for the nine months ended September the jet Twentytwenty increased 646000 from 372000 in the prior year the.

The increase is due to only one month of premium being recognized through the first nine months of last year as a result of previous accelerated premium recognition when compared to normal premium recognition.

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For the third quarter of 222, we experienced with more law on net realized investment on a small negative change in fair value fit into securities compared to gains in last years third quarter net investment income for the first nine months of Twentytwenty 290000, compared to 182000 last year.

Net realized gains of 325 Golden was significantly higher than 3000 last year. However, we experienced 343000 decline for your body before it could the securities compared to a gain of 20000 last year.

<unk> expenses include in loss and loss adjustment expenses policy acquisition costs, and underwritten expenses and general administrative expenses reduced for the end of the quarter. After nine months of 220 compared to last year reductions into the expenses due primarily to continued reductions money for since you didn't know was unique cool which declined to 700.

7000 <unk> nine.

Nine months of the year from <unk> <unk> thousand last year.

With a high revenue then reduced expenses, we generated a reduced net loss for the nine months ended September 30th 2020 of 200 and to do so four cents per share compared to a net loss of 366000 or six cents per share through the first nine months of last year.

Good quarter Twentytwenty loss increased slightly to so you do so.

15000 in last years third quarter.

With respect to French officials, we used to be this measure I don't like the growth and profitability are for business solutions for reinsurance business, we measure underwriting profitability based on minimum loss ratio was an expense ratio.

And the resin expenses, we shouldn't combined ratio well loss ratio, which measures on record profitability is the re show for losses and loss adjustment expenses incurred to net premiums ceded loss ratio for the third quarter and first nine month of 20% to 21% the same as last year, but there was no loss or loss adjustment expenses.

Oh acquisition cost ratio, which measures operational efficiency compute the policy acquisition costs and other underwriting expenses than that Britain's and.

Who acquisition cost ratio was 10.9%.

Well, the third quarter and first nine month of 20 to 21, respectively compared to 11.1 cents, an 11 cents for the CP with last year.

The decrease in the third quarter was due to low weighted average acquisition cost on reinsurance contracts enforced in the period compared to last year.

That was in cost ratio remain unchanged for the nine month period ended September since June 2020.

29.

Oh expense ratio, which measures upwards in performance compute the policy acquisition costs and general administrative expenses.

The expense ratio for the third quarter of <unk> nine month of Twentytwenty, one was 7.7% and 120, <unk>, 7%, respectively compared to one of 5.7% in 228.2% for the same view as last year.

The increase in food courts is due primarily to the what do you know anything that premium and that's recorded during the third quarter when compared with the previous period. The decrease for the nine months ended September could get Twentytwenty was due to reduced general and admin expenses. This year on a highly nobody's they net premiums into deep into winter.

20, when compared with the imputed into anything there.

Oh combined ratio, which is used to measure on resin performance because of some of the loss ratio and the expense ratio.

Combined ratio for the three and nine months ended September through to get to 2020.

What is one of the 7.7% and 129.7% respectively.

Two one is that when a 5.7% in 228.2% for the same period into into making.

The increase in the third quarter was due to the lower denominator in net premiums when compared to last year. The decrease through the first nine months of the year resulted from a higher denominated net premium.

On the reduced so expenses infant to quickly when compared with the prior year no.

No to them to the balance sheet Len Smith.

Comprises of investment.

Yes.

255 building at September 30th Twentytwenty, competing with Nike and simplicity.

You bet.

The decrease is due to the feel of equity securities.

Thank you.

That's up to them, but to get Twentytwenty cash and cash equivalents unrestricted cash and cash equivalents.

Like 12 million compared to <unk> million.

Total shareholders equity at September if it gets any funding, what's that 1.8 million compared to <unk> million.

Sympathy for 29.

At September 15, 2021 for sure.

Now with that I'd like to turn the call back over to Jay Jay.

Thank you Brenda throughout reinsurance sidecar, we've been able to add a degree of diversity to our revenue stream at risk, while still having the ability to achieve attractive returns as I mentioned, we were very pleased with the retrans generator for the contractor ended may 31st, reflecting 20, where our sidecar investors aren't an attractive return 36%.

Going forward or the long term, we remain optimistic about the prospects are not only our core business, but also our reinsurance sidecar, we continue to evaluate additional opportunities for growth as white house diversification of risk. So in closing we continue to reduce our gen costs sidecar investors continue to earn an attractive return.

We're gonna man invest it mostly in cash we got that free we have a strong balance sheet and a soft start solid cash position and more importantly, we have a real opportunity for growth at a stable by both business with that we are ready to open the call for questions. Operator, please provide the appropriate instructions.

Thank you Sir at this time, if he would like to ask a question. Please press Star then one on your Touchtone phone.

May remove yourself from the queue at any time by pressing the pound key once again that is star one to ask a question we will pause for a few moments to allow questions to queue.

Our first question.

Is from tenants.

And Lee take capital Security Your line is open thank.

Thank you Jay Jay random.

Can I read a story about the catastrophic bond market, how it's basically imploding and how yields are basically spiking.

How does that play in regards to on the reinsurance market.

Yeah.

That's a really gives us a good oh by the way Hi, Ken Thanks for the question.

That stuff that's.

That really gives us the opportunity to grow that sidecar business, because while the bond market cat bonds are paying.

Yeah anywhere from six to 6% to 10% somewhere thereabouts.

Our side car is producing a much higher return and.

While folks could argue various different ways on the.

On the way the Oh by the way the investment looks in terms of various different things, we believe that significant opportunity to grow that sidecar piece so while.

It's a it's a slightly different way offering but it's.

A slightly different way of investing in the reinsurance business it definitely boards well for us.

My understanding that the only way to be a pop in reinsurance contracts is being a reinsurance contract reinsurance company itself or invest in a side car is that a correct assumption yeah.

Yes that is correct.

I would think with the yields that you're getting in the returns that you're getting I would think the funds she would like be flowing in like water based upon the incredible returns hijab based upon the other really you're a another competitor has been knocked out because of the issues beyond their control.

B, we have significant opportunity in the sidecar because aside cars actually open to two you know almost everybody wins within certain circle.

Constraints.

However, this year when we have a marketing for our side car. That's why they got up that's what the world got.

Got caught up with Covance. So by the time things settle about it was too late for us to deploy more capital through that sidecar because that window of raising the body for sidecar called true. So hopefully once we go through next year and once we come up with next year well have that well have another bite at the Apple focus with US following season. So.

Yes, we we look forward to taking advantage of that.

Hey, I look forward to the the the protect profitability coming from that and and the like as you grow that because again my very limited understanding is that it operates like the old fashioned now hedge fund two and 20 and it's.

It's very easy to do the math on the potential profitability that is there so.

Hey, Hope you marketing, bringing a zillion dollars in it [noise].

[laughter] look for yes, Kevin. Thank you so much hey, thank you.

Once again, if you would like to ask a question. Please press star and one on your Touchtone phone Bill.

Pause for a moment to allow questions to queue.

Once again that is star and one ask good questions, we'll pause for a few more minutes minutes of questions Kim.

At this time this concludes our question and answer session.

I will now turn the call back over to Mr., Matt Hill for his closing remarks.

Thank you for joining us on todays call before we wrap up I'd like to thank our employees business partners and investors for their continued support I, especially want to express my gratitude to our Oxbridge team, who continue to leverage our significant experience or management to manage and build our business. During these challenging times. It is their dedication that export.

He's stuff will get us through these days and we look forward to updating you on our next call. If you have any further questions. Please reach out anytime. Thank you again for your time and attention today and your interest at Oxbridge operator.

Before we conclude today's call I would like to remind everyone that a recording of today's call will be available for replay via a link available on the Investor section of the company's website. Thank you for joining us today for our presentation you may now disconnect.

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