Q3 2024 Oxbridge Re Holdings Ltd Earnings Call
Satsang with Mooji
Speaker Change: Ladies and gentlemen, thank you for your patience. The conference will begin in just a couple of minutes. Again, thank you for your patience.
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Joe: Good afternoon. Welcome to Oxbridge RE's third quarter 2024 earnings call. My name is Joe and I will be your conference operator this afternoon.
Joe: At this time, all participants will be in a listen-only mode. Joining us for today's presentation is Oxbridge REU's Chairman, President, and Chief Executive Officer, Jay Madhu, and Chief Financial Officer and Corporate Secretary, Wrendon Timothy.
Speaker Change: Following their remarks, we will open up the call for your questions.
Speaker Change: I would like to remind everyone that this call will be available via telephone replay until November 26, 2024 on the Investor Information section of the Oxbridge RE website at www.oxbridgere.com.
Speaker Change: Now, I would like to turn the call over to Wrendon Timothy, Chief Financial Officer of Oxford Re, who will provide the necessary cautions regarding the forward-looking statements that will be made by management during this call.
Wrendon Timothy: Thank you, operator. During today's call, there will be forward-looking statements made regarding future events, including Oxford Rees' future financial performance. These forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995.
Wrendon Timothy: Words such as anticipates, estimates, expects, intends, plans, projects, and other similar words and expressions are intended to signify forward-looking statements.
Thank you very much.
Wrendon Timothy: A detailed discussion of risks and uncertainties that could cause accurate results and events to differ materially from such forelooking statements is included in the section entitled Risk Factors.
Wrendon Timothy: continue in our Form 10-K file on March 26, 2024 and our Form 10-Q file today with the Securities and Exchange Commission.
Wrendon Timothy: The occurrence of any of these risks could have a material adverse effect on the company's business, financial condition, and the volatility of our earnings, which in turn can cause significant market and trading volume fluctuations for our securities.
Wrendon Timothy: Any forward-looking statements made on this conference call speak only as of the date of this conference call.
Wrendon Timothy: and accept as required by law, the company undertakes no obligation to update.
Speaker Change: Any forward-looking statements contained on this call or in any company presentation even if the company's expectations for any related events, conditions or circumstances change. Now, I'd like to turn the call over to our Chairman, President and Chief Executive Officer, Sanjay Madhu.
Sanjay Madhu: Thank you, Wrendon and welcome everyone. Thank you for joining us today. Let me start by saying we're proud of the significant steps we have taken to fortify and diversify our business.
Sanjay Madhu: While we are solidly entrenched in the RWA-Web3 space, where we issue tokenized securities as an RWA, where the underlying asset is reinsurance. Our core business, however, remains reinsurance, where we write fully collateralized policies to cover property losses from specific catastrophes.
Sanjay Madhu: And because we write fully collateralized contracts, we believe we can compete effectively with large carriers.
Sanjay Madhu: 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.
Sanjay Madhu: Our objective is to achieve long-term growth in book value per share by writing business on a selective and opportunistic basis that will generate attractive underwriting profits relative to risk.
Sanjay Madhu: Building on the Stable Reinsurance Foundation, we began to diversify our business in 2022.
Speaker Change: Insurance Plus specializes in democratizing tokenized real-world assets, or RWAs, offering tokenized reinsurance securities as alternative investment opportunities.
Speaker Change: These securities leverage blockchain technology to ensure complete transparency and compliance with SEC guidelines.
Speaker Change: 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 selective group of ultra-high net worth individuals.
Speaker Change: Crucially, the establishment of Insurance Plus was achieved without incurring new debt, reflecting our efficient approach to diversification. We are enthusiastic about the prospects of these new investments and remain committed to keep our stakeholders informed of their progress in the forthcoming quarters.
Speaker Change: Looking ahead, we intend to position Oxbridge as a prominent player in the RWA or Real World Assets slash Web3 sector.
Speaker Change: In summary, we maintain a strong sense of optimism regarding the long-term outlook of our core reinsurance business alongside the successful integration of Assurance Plus as we embrace the RWA market more comprehensively.
Wrendon Timothy: I'll now turn things over to Wrendon to take us through our financial results.
Thank you.
Wrendon Timothy: Thank you, Jay. I'd like to remind you that our typical contract period is from June 1 to May 31 of the following year.
Wrendon Timothy: Net premiums earned for the quarter ended September 3rd, 2024 with $595,000 compared to $549,000 in last year's split quarter.
Wrendon Timothy: For the first nine months of 2024, net premiums earned were $1.7 million, up from $738,000 in the same period last year. The increases are due to the reinsurance contracts enforced during the full period ended September 3, 2024, when compared with the prior year.
Wrendon Timothy: There have been no losses to date, including in 2024 or 2023. Our net investment and other income decreased in the quarter and the first nine months of 2024 due to less cash being held in money market funds.
Wrendon Timothy: We also recognize $188,000 negative change in the fair value for equity securities as of September 30, 2024, decreasing from $34,000 negative change in the prior year.
Wrendon Timothy: All these factors together resulted in total revenues of $205,000 for the three months ended September 30, 2024, compared to $-6.38 million in the prior year's third quarter. For the first nine months of 2024,
Wrendon Timothy: Total revenue of $124,000 compared to $5.1 million negative for the same period last year.
Wrendon Timothy: Total expenses including lots and lots of adjustment expenses, policy acquisition costs and general and admin expenses were down in the third quarter and first nine months of 2024 compared to last year.
Wrendon Timothy: The decrease in 2024 was due primarily to the decrease in offering costs associated with TransPlus being recognized when compared with the same period last year.
Wrendon Timothy: With respect to net income, primarily due to negative change in the fair value of equity securities and investments in the third quarter.
We generated a net loss of $540,000.
Wrendon Timothy: $0.09 per share compared to net loss of $10.3 million or $1.24 per share in the last year's third quarter.
Wrendon Timothy: For the nine months ended September 30, 2024, the net loss was $2.26 million, compared to an odd $0.37 per share, compared to a net loss of $7.24 million, or $1.23 per share in the same period last year.
Wrendon Timothy: The improved result this year was due to the high revenue driven by the decrease in unrealized loss on other investments more than outweighing higher premium levels and management fee income from our insurance plus offering.
Wrendon Timothy: As we have discussed before in our investor course, we use various measures to analyze the growth and profitability of our business operations.
Wrendon Timothy: For reinsurance business, we measure underwriting profitability by examining our loss ratio, acquisition ratio, expense ratio, and combined ratio. Our loss ratio, which measures underwriting profitability, is the ratio of losses and loss adjustment expenses incurred to net premiums earned.
Wrendon Timothy: With no losses or losses just on expenses in either 2024-2023, the loss ratio was 0% in both periods.
Wrendon Timothy: Our acquisition cost ratio, which measures operational efficiency, compares policy acquisition costs to net premiums earned.
Wrendon Timothy: The acquisition cost ratio increased marginally 11.1% for the three-month period ended September 30, 2024, and 11% for the nine-month period ended September 30, 2024, from 10.9% for the three- and nine-month period ended September 30, 2023.
Wrendon Timothy: The increase is primarily to premiums being earned during the full periods ended September 30th 2024 when compared the partial period in the prior periods.
Wrendon Timothy: Our expenses show which measures operating performance compares policy acquisition costs and general and admin expenses with net premiums earned.
Wrendon Timothy: The expense ratio decreased from 125.3% for the three-month period ended September 30, 2023, to 83.7% for the three-month period ended September 30, 2024. The decrease is due to higher levels of premiums earned and lower general admin expenses incurred during the three months.
Wrendon Timothy: and it's September 3rd, 2024 when compared to the prior period.
Wrendon Timothy: The expenditure should decrease from 244.3% for the nine-month period ended September 3, 2023 to 19% for the nine-month period ended September 3, 2024.
Wrendon Timothy: The decrease is due to higher level of premiums as well and lower general annual expenses incurred during the 9-month period ended September 30, 2024 when compared to the prior period. Our combined ratio, which is used to measure underwriting performance, is the sum-of-the-loss ratio and the expense ratio.
Wrendon Timothy: The combined ratio decreased from 125.3% for the 3-month period ended September 30, 2023, to 83.7% for the 3-month period ended September 30, 2024.
Wrendon Timothy: The decrease is due to high levels of premiums earned and lower general admin expenses, including the 9-month period ended September 30, 2024. The combined ratio decreased from 243.5% to 243.5% on September 30, 2024.
Wrendon Timothy: 44.3% for the 9-month period ended September 3, 2023 to 98% for the 9-month period ended September 3, 2024. Again, the decrease is due to high level of premiums and lower general admin expenses during the 9-month period ended September 3, 2024 when compared with the prior period.
Now turn into the balance sheet. Our investment portfolio decreased.
Wrendon Timothy: to $185,000 at September 30, 2024 from $688,000 at the prior year-end.
Wrendon Timothy: primarily as a result of the sale of equity securities and the decrease in the fair value of equity securities during the quarter.
Wrendon Timothy: Our investment decreased significantly from $2.4 million to $541,000 due to the fair value change in our investment in Jet AI, which the company has an equity investment measured at fair value.
Wrendon Timothy: Cash-in-cash equivalents and restricted cash-in-cash equivalents increased to $4.82 million at September 30, 2024, compared with $3.74 million on December 31, 2020.
Wrendon Timothy: Now I'll turn the call back over to Jay to wrap up before we take your questions. Jay? Thank you, Wrendon. As highlighted earlier in today's discussion, we have implemented decisive and substantive measures throughout this year and last to fortify and diversify our operations.
Wrendon Timothy: In December 2022, we established InsurancePlus with the objective of tokenizing securities representing fractionalized interest in reinsurance contracts underwritten by a reinsurance subsidiary.
Wrendon Timothy: In the second quarter of 2023, we successfully concluded the initial offering of these security tokens, Delta Capri. This was issued on the Avalanche blockchain.
Wrendon Timothy: Furthermore, as previously reported, Inmessas and Delta Caterie received an exceeding
Wrendon Timothy: 49% surpassing the initial 42% projection, despite the challenges posed by Hurricane Adelia, which made landfall as a Category 3 hurricane in 2023.
Wrendon Timothy: We believe these are the first tokenized reinsurance securities backed by a publicly traded company. Shortsplots is poised to democratize access to reinsurance as an alternative investment avenue, leveraging the inherent advantages of blockchain technology to craft sophisticated digital securities.
Speaker Change: By opening access to an asset class historically limited to a select few due to high financial entry barriers, Shores Plus is breaking new ground.
Speaker Change: Leveraging REG-D and REG-S frameworks, investors can now enter this unique asset class within minutes, effectively completing AML, KYC, and document signing requirements.
Essentially, we have democratized access to reinsurance.
Speaker Change: Additionally, Oxford Holdings has initiated a strategic review process, forming a special committee of the board to consider a full range of strategic alternatives for the company and its Web 3.0 division subsidiary, Insurance Plus Holdings Ltd.
Speaker Change: This process may include a sales, spin-out, merger, divestiture, recapitalization or other strategic transactions or continuing to operate as a public independent company.
Speaker Change: In recent developments, Assurance Plus completed a private placement of 287,705 participation shares represented by digital token Epsilon Cat3 under a three-year participation share investment contract.
Speaker Change: Raising approximately 2.9 million. The Epsilon Catri participation shares, represented by digital tokens, issued on an Avalanche blockchain, have a targeted return of 42%. This follows the success of last year's token, Delta Catri.
Speaker Change: which while targeting a 42% return, paid out a remarkable 49.11% return, surpassing initial projections.
Speaker Change: While the season has been an extremely active one, we don't believe we will be impacted by Hurricane Helene.
Speaker Change: On Hurricane Milton, we cannot comment on the outcome as we have not yet received finalized data due to the hurricane being recent.
Speaker Change: a pioneer in digital asset management which has issued over four billion in assets on chain to date.
Speaker Change: This strategic partnership is set to further expand our footprint. This collaboration aims to enhance our RWA tokenization and Web3 capabilities. As we go forward, we aim to pursue additional relevant strategic partnerships.
Speaker Change: Insurance Plus is well positioned with substantial growth potential for our shareholders. We are proud of this accomplishment and look forward to this exciting new entity diversifying and accelerating our growth in the RW space in coming years.
Speaker Change: These compelling opportunities not only augment our business, but also enhance our risk profile, strategically positioning us to capitalize on growth with emerging technologies.
Speaker Change: We are especially enthusiastic about the anticipated value these investments hold and benefits they offer to our shareholders.
Speaker Change: As previously mentioned, we have made the turn positioning Oxbridge as an RWA Web 3 focused company, leveraging the significant progress we have achieved over the last two years.
Forecast suggests an extraordinary expansion to expand RWA tokenization.
Speaker Change: This growth trajectory is fueled by the escalating adoption of the tokenized RWA market over the next decade, with estimates exceeding 10 trillion.
Speaker Change: This has been reinforced further recently as Securitize announced they had secured a $47 million round of funding led by BlackRock in blockchain technology across various traditional financial sectors.
including fiat currencies, equities,
Speaker Change: Endorsements from institutions like BlackRock, Bank of America, UBS, State Street, Franklin Templeton, Deutsche Bank, Credit Suisse further affirm the transformative potential of tokenization
Speaker Change: in Enhancing Financial Infrastructure Efficiency, Reducing Costs and Optimizing Supply and Distribution Chains.
Speaker Change: Moreover, industrial analysis from firms such as Boston Consulting Group anticipate a substantial surge in the tokenized asset market, potentially reaching $16 trillion by the year 2030.
Speaker Change: As pioneers in this evolving landscape, we hold a strong sense of optimism regarding the value of our rebranding efforts will unlock for our shareholders. We remain steadfast in our commitment to seizing the opportunity presented by this dynamic market shift.
Speaker Change: With that, we are ready to open the call for questions. Operator, please provide the appropriate instructions.
Thank you. Thank you. Thank you.
Speaker Change: Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad and a confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star 2 if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys.
Speaker Change: And our first question comes from the line of Kent Engelke with Capital Markets, Capital Securities. Please proceed.
Kent Engelke: Hey, Wrendon. Hey, Jay. How are you all being received on the presentations you've been making abroad? And you used the word well-entrenched in regards to the RWAs. Who are your competitors?
Speaker Change: Thanks for dialing in. To take it from the beginning, we've attended various different events. I was part of a speaker panel and a speaker at some of these events as well.
Thank you.
Thank you.
Speaker Change: It was viewed exceedingly well. In the RWA space, there are various folks that have come up with some very interesting propositions.
Speaker Change: However, there aren't that many that are actually straight out RWAs where the underlying asset is something extremely direct and tangible.
Speaker Change: In this case, the RWA real-world asset is a reinsurance contract, it follows the fortunes of an actual reinsurance contract, which is aggregated with the various different contracts that we take.
Speaker Change: So it's not marked up, it's not, it is extremely well put together and and we got we got tremendous
Tremendous feedback from those attending over there.
Speaker Change: Great, cool. And who are you? Can you name any of your competitors? You said you're well entrenched in that arena and the like, getting some great publicity against some strong people that are interested in what you're doing. Who are some of the competitors that you're going up against?
Speaker Change: We not only have PCOB audited financials on the holding company, but we strategically have PCOB audited financials on Insurance Plus itself, the RWA entity.
Speaker Change: So, not only do we have PCOB audited financials, but then we are also, because everything is rolled up in the POPCO.
Speaker Change: There's strict adherence from the SEC as well. So, in terms of saying who are our competitors, there are a few, but I don't believe there's anybody like us. I think we're, just because of where we stand and what we have.
Speaker Change: I could say your immediate reaction to your earnings report is positive on the bid side you're up about 8% on the offering side you're about 15% on the aftermarket. We'll see how it trades tomorrow. It sounds very very promising. Thank you.
Thank you, Kent. I appreciate it.
Thank you. Bye bye.
Operator? Yep.
Speaker Change: Thank you. Ladies and gentlemen, there are no further questions at this time. I'll turn the call back to Mr. Madhu for his closing remarks.
Sanjay Madhu: Thank you for joining us on today's call. Before we conclude, I would like to extend my gratitude to our employees, business partners, and investors for their unwavering support. I particularly want to acknowledge our dedicated Oxfords team, whose extensive expertise has been instrumental in navigating and advancing our business amidst these challenging circumstances.
Sanjay Madhu: We anticipate providing you with further updates on our progress during our next call. 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
Speaker Change: 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 investor section of the company's website. Thank you for joining us today for our presentation. You may now disconnect.
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