Q1 2022 Oxbridge Re Holdings Ltd Earnings Call

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Ladies and gentlemen, thank you for a whole danger call will begin momentarily.

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Yeah.

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Good afternoon, welcome to Oxbridge Re's first quarter 2022 earnings call. My name is Chris and I will be your conference operator this afternoon.

All participants will be in a listen only mode are 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 random Timothy.

Following their remarks, we will open the call up 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 June 11 2022.

On the Investor information section of the Oxford Bridge or your website at Www Dot Oxbridge re dot com.

Now I would like to turn the call over to Brendan 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 Oxbridge 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.

Considering that there are no guarantees of future results and conditions, but rather are subject to various risks and uncertainties.

A discussion of these risks and uncertainties that could results that could cause actual results or events to differ materially from such forward. Looking statements is included in the section entitled Risk factors contained in our Form 10-K filed on March 31 2022.

Our Form 10-Q filed today May 12, 2022, 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 Poland, and which in turn can cause significant market price and trading volume fluctuations for securities any forward looking statements made on this conference call speak only as of the date of this conference.

Cool.

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

Jay Thank you Brendan and welcome everyone. Thank you for joining us today as we have done over the past two years, we continue to monitor.

How the ongoing COVID-19 pandemic affects our markets and our business and we will continue to adapt to any issues that arise.

Yeah.

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 nine 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 our licensed reinsurance subsidiary Oxbridge reinsurance limited and our licensed reinsurance sidecar Oxbridge re at US we write fully collateralized policies to cover property losses from specific catastrophes.

And because we rightfully 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 will deploy our capital when favorable return opportunities arise that could contribute to the growth of capital and surplus and our licensed reinsurance subsidiaries overtime.

Clearly the current volatility being experienced in the global financial markets is impacting our investment portfolio as we experienced in the first quarter of 2022 with the unrealized losses.

However, we remain steadfast in ensuring we stay close touch into the global markets and we'll react as necessary.

We are also very pleased <unk> completed our investment in Oxbridge acquisition Corp. In early August of last year, a special purpose acquisition company or spec focused on disruptive technology, we have.

We believe innovators in Africa, you're entrepreneur and such businesses as defy blockchain in short tech our AI offer a great offer a real and significant opportunity to build value for our investors over the long term.

We look forward to keeping you updated on its progress.

Turning to our results for the first quarter of 2022 following much stronger performance in 2021 from our operational perspective, we are pleased with the results of Q1 of the New York Rev.

Revenues were up however, the unrealized negative change in fair value of equity Securities and other investments led to a net loss for the quarter looking.

Looking ahead, while we are confident of our core reinsurance business. We continue to be cautious and optimistic. We are also excited about the potential value in the investment our stock can bring to our shareholders in the future.

Now I will turn things over to Randy to take us through our financial results. Thank you Jay I would like to remind you that our typical contract period is from June one to meet the deferrals of the full year with.

Net premiums earned net premiums and an increase in the first quarter of 2022, due primarily to the higher weighted average rate on our reinsurance contracts in force during the period and there were no reported losses during the three months ended March 31st 2022.

Our net investment and other income rose moderately in the quarter, primarily due to the administrator.

The fee income related to the spec investments. Additionally, we generated realized gains of 7000 due to sales of equity securities during the quarter.

As Jim mentioned, we had an unrealized loss of 250000 due to the negative fair value changes in our equity investment in Fox, which absolutely circles.

We also recognize the 20th those negative change in the fair value of equity securities compared to a gain of 124000 in Q1 of 2021 all of the factors taken together resulted in total revenues a mountain to note during the quarter compared to 319000 in the prior year's first quarter.

Total expenses, which includes loss and loss adjustment expenses policy acquisition cost and general and admin expenses were up in the quarter due primarily to an increase in operating expenses resulted from increased personnel and other expenses included inflationary fluctuations.

We had a net loss of 387000 in the first quarter of 2022 compared to a net loss of 20000 last year due primarily to the unrealized negative change in the fair value for equity securities and other investments.

Turning to the financial ratios as we have discussed before.

The call to use various measures to analyze it.

Roofing profitability of all core business operations for our reinsurance business, we measure underwriting profitability by examining our loss ratio acquisition ratio expense ratio and combined ratio or loss ratio, which measures underwriting profitability is the ratio of loss and loss adjustment expenses incurred to net premiums earned.

For both the fourth quarter of 2022 and 2021 over the loss ratio was zero.

Losses or loss adjustment expenses in either period.

Our acquisition cost ratio, which measures operational efficiency compares policy acquisition costs and that premium is good.

The acquisition cost ratio remained consistent and stable at 11% in both quarters, our expense ratio, which measures operating performance can be a policy acquisition costs and general and admin expenses with net premiums.

Expense ratio increased in the quarter due to the higher general and admin expenses compared to last year.

Our combined ratio, which is used to measure underwriting performance is the sum of the loss ratio on the expense ratio is low who should increase to 172% in the fourth quarter from 150% last year again due to the higher general and admin expense cost during the quarter.

Now turning to the balance sheet, our investment portfolio increased to 755000 at March 31st 2022 from 577000 at the yearend deeper.

<unk>, primarily to the net purchase of equity securities in the quarter other investments, which is of interest went into spot could be claimed 230000 as mentioned due to the negative change in the fair value of our investment in <unk> acquisition cost cash and cash equivalents and restricted cash and cash equivalents increased.

Decreased.

And stood at $5 1 million at March 31st 2022, compared to $5 4 million at December 31, 2021 total shareholders' equity at March 31, 2022 stood at $16 3 million now I'd like to turn the call back over to Jim to wrap up before boutique and your first question Jay.

Rondon as previously mentioned through our reinsurance subsidiary will look to invest close to 50% of our equity last year was no different between our reinsurance contracts and through investments in oases sponsored limited the sponsor of the spec we have stuck to that resolved, while oxfords worries a lead investor in the stack some of that risk capital has laid off to additional investors.

The sponsor at a higher share price the result, being that despite the fact that Oxford <unk> contributed approximately $34 seven up the risk capital, Oxford economics are significantly maximized and that it owns approximately 49, 6% and 63, 1% of the ordinary shares and preferred shares respectively. After sponsor.

Which tracks the class B shares and private placement warrants respectively in the spec.

Thus our investment 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 value of our investments on the potential that Oxford acquisition core can bring to our shareholders. Looking ahead, we remain optimistic about the long term prospects of our business.

As always we continue to evaluate additional opportunities for growth as well as further diversification of our risk profile. So in closing our business is diversified our investment at Oxford Oxbridge acquisition offers and entry into new technology businesses with a focus on blockchain and short tech and artificial intelligence.

We remain debt free we have a strong balance sheet with a solid cash position and most importantly, we have real opportunity based on a viable business model that is based on diversification I believe where you would I will leave you with one thought and that is opportunity.

With that we're ready to open the call for questions. Operator, please provide the appropriate instructions.

Okay.

Thank you, Sir ladies and gentlemen at this time. Please press star one on your telephone keypad. If you have questions that is star one on your telephone keypad, if you have questions.

And our first question will come from Kent <unk> Capitol Securities Management. Please proceed.

Hey, Brandon Hey, Jay I recognize that this is not a call about this back its call about oxbridge, but yeah. As you said many times, Oxford does have a significant investment in this back in if I'm not mistaken. This back raised about $160 million also everyone very much where that the environment for <unk>.

Facts have changed dramatically Simplistically speaking how's it going.

Taking place.

Yes, yes.

Yes, you are right.

Yes.

I can't say too much about the spot because it's a different company, but we do have an investment of that so.

I'd like to say at least a few words right so with that.

When we did the investment of the specs we were always of the belief that if the market went well we would be fine, but if there were any gyrations in the market that would be additional opportunity and that's exactly where we stand we are extremely happy that we didn't we didn't put any we didnt do any business combinations over the last year, when we went out because.

That could have had a negative effect at this point so at the moment the IPO market has.

We're seeing a lot of challenges.

The spot market is seeing a lot of conversation. However, we're sitting on $116 million of cash in a tax neutral jurisdiction and when I say tax jurisdiction. We're in the Cayman Islands, we adhere to economic substance of substantive presence. So we're not a pure box company, we're not sitting.

In the U S. While we're while we're doing business in the case I'm not saying, we're doing business that came on we are a cayman legitimate Cayman Island business, so companies and.

Our focused direction blockchain AI technology, those companies usually tend to scale outside of the U S and as such.

They would need a presence so they would appreciate a presence and a tax jurisdiction and here. We are so while there is while there is a lot of strife and theres a lot of concern we're in a great position valuations a few a few weeks ago, a few months ago, a few years ago have now come down to.

To possibly a reality that may go down further, but whatever the cases, they're in a much better position and we are able to take advantage of that not only from where we sit but also with our treasure trove of $116 million.

So to make sure I hear you correctly you said.

With the disruption in the spec market that is very positive that you didn't put the money to work back when you raised it in August September October time period, now valuations are come back down to a more realistic level youre sitting on $160 million or dispatch is sitting on $160 million and you're a viable entity in a in a car.

That has very favorable tax status, if I hear you correctly is that correct.

Yes, absolutely.

Cool.

More of a generic question in regards to the Oxbridge is regular reinsurance business.

How are you viewing this upcoming season.

Yeah. So.

Reinsurance and insurance is a big hot topic in Florida, Florida is our Florida is our geography that we tend to invest most of our money is in the southeast states off United States.

The high focus in Florida.

What we've seen over the last several months there have been there's been a lot of concern in the Florida market.

Hi.

And.

Covid has not done much the war has not done much to help out either right because things are changing.

Economy is changing drastically.

The so where we currently stand as it is in a fantastic place because we had the opportunity to pick and choose and we've always been very optimistic so similarly.

While we see there is some opportunity we're very cautious about the market as we go forward.

I understand what you're saying.

So being an opportunist.

Opportunistic, but also cautious and long and short of it is we're all waiting to hear some positive news on this back in the late candidates.

Again, I recognize youre not the stock company.

But they.

The delay to date has been very.

Very opportunistic for you all because you are able to buy stuff at a cheaper price than it was like a year ago or something like that and so look forward to hearing further news about this back.

Excellent. Thanks, Ken Thank you Curt.

Thanks, Jason Thanks, Rahul right once again.

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Once again, ladies and gentlemen that is star one on your telephone keypad. Your question. Please press star one on your telephone keypad for question.

Once again, please press star one on your telephone keypad for questions. Once again Thats star one on your telephone keypad.

Seeing no questions joined the queue. At this time. This concludes our question and answer session I'd 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 our 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 dedication and expertise that will get us through these days and we look forward to updating you on our next call. If you have any further questions. Please give us a call anytime.

Thank you again for your time and attention today and your interest in Oxbridge again, I will leave you with one thought that as opportunity.

Thank you.

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 in the investors section of the company's website. Thank you for joining us today for our presentation you may now disconnect.