Q4 2021 Oxbridge Re Holdings Ltd Earnings Call

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Thank you for standby, ladies and gentlemen, todays conference call will begin soon please remain connected at this time.

This afternoon's conference call will begin shortly thank you again for your patience.

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Good afternoon, and welcome to the Oxbridge re <unk> fourth quarter 2021 earnings call. My name is Matthew and I'll be your conference. Operator. This afternoon. At this time, all participants will be on a listen only mode. Joining us for today's presentation is Oxford, <unk>, 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 is also being broadcast live via webcast and available via webcast replay until April 32022 on the Investor information section of the occupant Reis website at Www Dot octopus re dot com.

Now I'd like to turn the call over to rent and 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.

Sir Please proceed.

Thank you operator during today's call there will be forward looking statements made regarding future events, including Oxbridge re's future financial performance.

These forward looking statements are made pursuant to the private Securities Litigation Reform Act of 1095.

Such as anticipates estimates expects intends plans projects and other similar words unexpressed tunes I intended to signify forward looking statements.

Forward looking statements are not guarantees of future results and conditions would rather are subject to various risks and uncertainties.

A detailed discussion of these risks and uncertainties that could cause actual results and events to differ materially from such forward. Looking statements is included in the fixed and entitled risk factors, which is contained in our Form 10-K .

File with the Securities and Exchange Commission.

The occurrence of any of these risks and uncertainties could hub in material adverse effect on the company's business financial.

<unk> financial condition, and all volatility of earnings which in turn can cause significant market price and trading volume fluctuation forward securities.

Any forward looking statements made on this conference call speak only as of the date of this conference call.

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.

The related events conditions or circumstances change.

In addition on March 11, 2020 that would have the organization characterized the outbreak of COVID-19 global pandemic, the disruption of global commercial activities across all market sectors and a significant declines in volatility in financial markets. As a result of the COVID-19 pandemic could have a material adverse impact.

Our financial position results of operations and cash flows possible effects included but are not limited to uncertainties with respect to current and future losses interest rates and equity market volatility.

<unk> business and financial market impact of the economy. The insurance industry is likely to experience material losses, which could reduce available capital and we expect may help to sustain the upward price trend for reinsurers that we tend to see across many lines of business.

However, the ultimate impact on current business in force as well as risks and potential opportunities on future business remains highly uncertain.

I would like to turn the call over to our chairman President and Chief Executive Officer, Jay Madhu.

Thank you Brenda and welcome everyone. Thank you for joining us today, while it appears we're finding a margin to some degree from the global COVID-19 pandemic, we continue to monitor the situation and will adapt to any future outbreaks as we have over the last two years. Fortunately the pandemic has little impact on our business 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 Oxbridge re holdings limited was founded over eight years ago with a mission to provide reinsurance solutions, primarily to property and casualty insurers in the Gulf Coast region of the United States through.

Through our licensed reinsurance subsidiary Oxbridge reinsurance limited and our licensed reinsurance sidecar Oxbridge re NFS rewrite 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 risks, where we believe sufficient data exists to effectively analyze the 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 deploy our capital when favorable return.

<unk>, our eyes back and contribute to the growth of capital and surplus and our licensed reinsurance subsidiaries.

Overtime.

We are also very pleased to complete our investment in Oxford acquisition Corp. In early August last year, a special purpose acquisition company or spark focused on disruptive technology.

We believe innovators and entrepreneurs such businesses blockchain insurance technology, and short Tech and artificial intelligence are very real and significant opportunity to build value for our investors over time.

Look forward to keeping you updated on its progress in the quarters ahead.

Turning to our results in 2021, we are pleased to report continued growth and progress revenues were up and net income increased significantly with a $9 2 million unrealized gain in our investment of Oxbridge acquisition Corp.

Overall underwriting was profitable in spite of a small underwriting loss of 158000 <unk>.

In the third quarter on one of our reinsurance contracts due to the impact of hurricane either on a book of business.

Looking ahead, we are confident our core reinsurance business will continue to grow and are excited about the potential and the investment in Oxford acquisition Corp.

And the continuing value.

It is anticipated to bring to our shareholders in the future.

In addition, we continue to make progress on our wholly owned subsidiary Oxbridge re NFS.

Reinsurance sidecar for the contract year end of May 31, 2021, our sidecar investors of the healthy return of approximately 17%.

I'll now turn things over to Randy to take us through our financial results.

Thank you Jay.

As a reminder to all investors. Our typical contract period is from June one to may 31st of the following year.

With respect to net premiums earned net premiums earned increased in 2021, due primarily to the triggering of a limit loss of a wonderful reinsurance contracts due to the impact of Oregon, Idaho, and a book of business, which resulted in the evolution of premiums earned as.

As well as higher rates on reinsurance contracts through the year.

Our net investment income and unrealized gains on other investments rose significantly in 2021, primarily due to the $7 1 million unrealized gain recorded in the value of the stock since its IPO in August 2021.

Net realized investment gains of 755000 in 2021 competitor.

374000 in the prior year, we also recognize that 167. So it was a negative change in the fair value of equity securities compared to 155000 in <unk>.

Prior year included all these factors total revenues rose to $10 2 million in 2021 from $1 2 million in the prior year.

Total expenses, which includes the loss and loss adjustment expenses policy acquisition costs, and general and admin expenses were up in 2021.

<unk>, primarily to losses suffered during the year, partly in Idaho as well.

In corporate expenses.

Now turning to oil ratios.

As we have discussed before new Investor calls, we use various measures to analyze the growth and profitability of our business operations.

For our reinsurance business.

We measure underwriting profitability by examining our loss ratio acquisition expense ratio underwriting expense ratio and combined ratio.

We will also issue, which method measures underwriting profitability is the ratio of losses and loss adjustment expenses.

Incurred to net premiums earned for the year ended December 31, 2020 on our loss ratio increased to 16, 4%.

<unk> zero percent in the prior year. The increase was due to the limit loss of Florida on one of our reinsurance contracts from Oregon, Idaho.

Partially offset by a higher denominator in net premiums compared with the prior year.

Our acquisition ratio, which measures operational efficiency compares policy acquisition costs and that premium soon.

The acquisition cost ratio remained consistent at 11% in both years.

Our expense ratio, which measures operating performance compares policy acquisition costs and general admin expenses with net premiums.

Our expense ratio increase in 2021 due to the recording.

Our loan.

For uncollectible premiums is wonderful season insurers was ordered into receivership subsequent to year end.

Our combined ratio, which is used to measure underwriting performance is the sum of the loss ratio and the expense ratio.

This ratio increased to 162.

6% in 2021.

The increase in our loss ratio this year, resulting from the limit loss software them under one of our reinsurance contracts as well.

The allowance for uncollectible premiums.

Turning to our balance sheet, our investment portfolio decreased marginally to 537000 at year end from 787000.

End of 2020 due to the net.

Equities during the year as well as changes in the prices through 2021.

The $11 million on the balance sheets of investments reflect the value of our investment in this pack.

Driven by an independent valuation expert at year end.

Cash and cash equivalents unrestricted cash and cash equivalents totaled $1 9 billion at year end.

Consistent with the prior year.

The slight decrease was due to the withdrawal of the majority of collateral on the expiry of contract in 2021 offset by the deposits under the 2021 2022 treaty year contracts.

Total shareholders' equity was $16 7 million.

Up from $8 million at the end of 2020, due primarily to the unrealized gain on our investment at Oxbridge acquisition Corp, which is measured by an independent valuation expert at year end.

I'd like to turn the call back to Jay to wrap up before we take your questions Jay.

Thank you Brendan through our reinsurance sidecar, we were able to continue to add a degree of diversity to our revenue stream and risk while still having the ability to achieve attractive returns. We were very pleased with the returns generated for the contract year, ending May 31, 2021, where our cycle investors arent unattractive, 17%, despite despite a record breaking.

2020 Hurricane season, following a solid return of 36% the prior year, we look for we look for another year of strong investment returns and the current contract here.

As previously mentioned in any given year through our reinsurance subsidiary, we look to invest close to 50% of our equity. This year was no different between insurance pardon me between reinsurance contracts on the investment at OFC sponsor limited the sponsor of the spec. We have struck we have stuck to that resolved, while oxbridge re as a lead investor in the Spacs.

Some of the risk capital was laid off two additional investors and the sponsor at a higher share price.

Being that despite the fact that <unk> contributes approximately 34, 7% of their risk capital Oxbridge as economics are significantly maximized and that it owns approximately 49, 6% at 63, 1% of the ordinary shares and preferred shares respectively. After sponsor, which tracks the class B shares are private placements.

So the spec.

Thus our investment further diversifies, our business positions us to capitalize on growth in the emerging disruptive technologies being developed.

We are very excited about the future unlocking after full market mark to market value of our investment potential about Oxbridge acquisition Corp intends to bring.

To our shareholders over the long term.

Looking ahead.

We remain optimistic about the long term prospects for our business as always we continue to evaluate additional opportunities for growth as well as future diversification of our risk profile. So in closing our business and our results are solid our sidecar investors continued to earn an attractive return.

Investment in Oxford acquisition offers an entry into a new technology technology business with a focus on blockchain and short <unk> and artificial intelligence intelligence.

We remain debt free and we have a strong balance sheet with solid cash position and most importantly, we have a real opportunity for growth based on a viable business model with that we're ready to open the call for questions. Operator, please provide the appropriate instructions.

Thank you, Sir ladies and gentlemen, if you have any questions or comments. Please press star one on your phone at this time.

Thank you at this time. This concludes our question and answer session I would now like to turn the call back over to Mr. Madhu for his closing remarks.

Thank you for joining us on today's call before we wrap up I want to thank our employees business partners and investors for their continued support.

Especially want to express my gratitude to our Oxbridge team will continue to leverage our significant experience to manage and build our business. During these challenging times.

It is their decision pardon me it is their dedication and expertise that will get us to these days and we look forward to updating you on our next call.

Any further questions. Please give us a call anytime and I sincerely mean that thank you again for our for your time and attention today and your interest in Oxbridge operator.

Thank you ladies and gentlemen. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.