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Presentation

Oxbridge Re Holdings Limited reports earnings inline with expectations. Reported EPS is $-0.02 EPS, expectations were $-0.02.

Operator: Good afternoon and welcome to Oxbridge Re’s First Quarter 2025 Earnings Conference Call. My name is Robert, and I’ll 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 Re’s Chairman, President, and Chief Executive Officer, Jay Madhu; 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 made available via telephone replay until May 26, 2025. Details for telephone replay are included in the press release issued today. Now, I’d like to turn the call over to your host, Wrendon 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.

Wrendon Timothy: 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. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to various risks and uncertainties. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled Risk Factors contained in our Form 10-K filed today, March 26, 2025, 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 our earnings, 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 call. 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’d like to turn the call over to our Chairman, President and Chief Executive Officer, Jay Madhu. Jay?

Jay Madhu: Thank you, Wrendon, and welcome, everyone. Thank you for joining us today. Let me start by saying we are proud of the significant steps we have taken to fortify and diversify our business. While we are solidly entrenched in the RWA Web3 space, where we issue took reinsurance securities in an RWA or real-world assets, our core business remains reinsurance, where we write 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 in book value per share by writing business on a selective and opportunistic basis that will generate attractive underwriting profits relative to risk. Building on the stable reinsurance foundation, we began to diversify our business in 2022. We expanded our business portfolio by establishing SurancePlus Inc., a new subsidiary focused RWA Web3 technology. SurancePlus specializes in democratizing tokenized real-world assets or RWAs, offering tokenized reinsurance securities as alternative investment opportunities. These securities leverage blockchain technology to ensure complete transparency and compliance with SEC guidelines, 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 select group of ultra-high net worth individuals. Crucially, the establishment of SurancePlus 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 keeping our stakeholders informed of their progress in the upcoming quarters. Looking ahead, we intend to position Oxbridge as a prominent player in the real-world or RWA Web3 sector. In summary, we maintain a strong sense of optimism regarding the long-term outlook of our core reinsurance business, alongside the successful integration of SurancePlus as we embrace the RWA market more competitively.

I’ll now turn things over to Wrendon to take us through our financial results.

Wrendon Timothy: Thank you, Jay. I would like to remind you that our typical contract period is from June 1 to May 31st of the following year. Net premium earned for the quarter ended March 31st, 2025, increased to $595,000 from $549,000 for the quarter ended March 31st, 2024. The increase is due to the rates — higher rates on contracts that were enforced in the quarter ended March 31st, 2025, when compared to the contracts enforced in the prior period. Our investment income and other income increased to $79,000 from $62,000 from prior first quarter. We also recognized a $35,000 realized gain on the sale of investment in Jet.AI. All these factors taken together resulted in total revenues of $692,000 for the three months ended March 31st, 2025 compared to negative $125,000 in the prior first quarter.

For the three months ended March 31st, 2025, total expenses, including policy acquisition costs and general and admin expenses increased to $578,000 from $548,000 for the quarter ended March 31st, 2024. The increase is primarily due to the value of stock-based compensation incurred during the three-month period ended March 31st, 2025, as a result of higher share price on grant date. For the three months ended March 31st, 2025, the company generated a net loss of $439,000 or $0.02 per basic and diluted loss per share compared to a net loss of $905,000 or $0.15 per basic and diluted loss per share for the quarter ended March 31st, 2024. The decrease in net loss is primarily due to the positive change in the fair value of equity securities, the sale of investments in Jet.AI during the quarter ended March 31st, 2025, when compared with the prior period.

As we have discussed before on our investor calls, we use various measures to analyze the growth and profitability for our business operations. For our reinsurance business, we measure underwriting profitability by examining our loss ratio, our acquisition ratio, expense ratio, and combined ratio. Our loss ratio, which measures underwriting profitability, is the ratio of loss and loss adjustment expenses incurred in net premiums earned. The loss ratio remained consistent at 0% for the quarter ended March 31st, 2025 compared with the quarter ended March 31st, 2024. Our acquisition cost ratio, which measures operational efficiency, compared to policy acquisition costs and net premiums earned. The acquisition cost ratio remained consistent at 10.9% for the quarter ended March 31st, 2025, compared with the prior year quarter.

Our expense ratio, which measures operating performance compared to policy acquisition costs and general and admin expenses with premiums earned. The expense ratio decreased marginally from 99.8% for the three-month period ended March 31st, 2024, to 95.8% for the three-month period ended March 31st, 2025. The decrease is due to higher net premium earned during the three-month period ended March 31st, 2025, when compared with the prior period. Our combined ratio, which is used to measure underwriting performance, is the sum of the loss ratio on the expense ratio. The combined ratio also decreased marginally from 99.8% for the three-month period ended March 31st, 2024, to 95.8% for the three-month period ended March 31st, 2025. The decrease is due to higher net premium earned during the three-month period ended March 31st, 2025, when compared with the prior period.

Moving to the balance sheet. Our investment portfolio increased marginally to $116,000 at March 31st, 2025 from $115,000 at the prior year-end, primarily due to the increase in fair value of equity securities during the quarter ended March 31st, 2025. Cash and cash equivalents and restricted cash and cash equivalents increased by $3.7 million or 62.8% to $9.6 million from $5.9 million as of December 31st, 2024. The increase is primarily due to premium deposits made during the three months ended March 31st, 2025, as well as the completion of a registered direct offering that generated $2.7 million net of expenses. I’ll now turn the call back over to Jay to wrap-up before we take your questions. Jay?

Jay Madhu: Thank you, Wrendon. As highlighted earlier in today’s discussion, we have implemented decisive measures over the last two years to strengthen and diversify our operations. In December of 2022, we launched SurancePlus with the objective of tokenizing securities representing fractionalized interest in reinsurance contracts underwritten by our reinsurance subsidiary. In the second quarter of 2023, we successfully completed the initial offering of these security tokens known as DeltaCat Re issued on Avalanche Blockchain. Notably, investors in DeltaCat Re achieved returns exceeding 49%, surpassing the initial 42% projections despite the challenges posed by Hurricane Idalia, which made landfall as a Category 3 storm in 2023.

We believe these are the first tokenized reinsurance securities backed by a publicly-traded company, an accomplishment that underscores our ability to lead through innovation. SurancePlus was established to democratize access to reinsurance as an alternative investment, leveraging blockchain technology to create sophisticated digital securities. Our security tokens are designed to offer broader investor participation, securely and transparently recorded on the blockchain. Using Reg D and Reg S frameworks, investors can seamlessly compete complete AML, KYC, and document signing requirements, accessing this historically exclusive asset class within minutes. By lowering the financial barriers that have traditionally restricted access to reinsurance, we are making this asset class accessible to a wider range of investors.

As part of our commitment to growth and industry leadership, we have actively participated in key global tokenization and blockchain events. This includes Consensus 2024 in Austin, Texas, TOKEN2049 in Singapore and TOKEN2049 in Dubai, where we engage with industry leaders, innovators, and investors. Our presence at these forums allowed us to showcase SurancePlus, strengthen business relationships and explore collaborative opportunities with prominent blockchain platforms. In addition to our core operations, Oxbridge Re has initiated a strategic review process, forming a special committee on the Board to explore a full range of strategic alternatives for the company and its Web3 division, SurancePlus Holdings Limited. These alternatives may include a sale, spinout, merger, divestiture, recapitalization, or continuing to operate as a publicly-traded entity.

In Q1 2025, our Board of Directors approved the inclusion of Bitcoin, Ethereum, and potentially other cryptocurrencies as part of our corporate treasury reserve strategy. This decision aligns with our commitment to innovation, diversification, and long-term value creation, recognized by the growing global adoption of blockchain-based assets. We recently announced a memorandum of understanding, or MOU, with Plume, a leading blockchain platform supporting $4.5 billion in assets and more than 18 million unique wallet addresses. This relationship has a potential to significantly expand distribution channels for our tokenized reinsurance offerings, enhancing our presence within the RWA ecosystem. While we continue to explore additional strategic relationships, this partnership highlights our commitment to growth.

Building on the Plume MOU, we remain focused on identifying and forming additional strategic partnerships to accelerate our growth in RWA tokenization and Web3 infrastructure. These alliances will enhance distribution capabilities and strengthen investor access to our innovative digital securities. As of now, we do not anticipate any material impact from Hurricane Helene. Regarding Milton, we continue to monitor the developments and await finalized data. Our disciplined approach to risk management positions us to navigate market dynamics with confidence. Looking ahead, we are pleased to highlight our 2025 and 2026 tokenized reinsurance offerings, which include two distinct options; a balance yield tokenized security, targeting a 20% annual return designed for investors seeking stable, attractive yields with moderate risk and a high-yield tokenized security targeting 42% annual returns, offering a higher risk/reward profile.

This 2-tiered structure expands our product suite, catering to a broader range of investor preferences and furthering our mission to make institutional-grade reinsurance accessible through blockchain-powered real-world assets. Recent industry reports, including those from Standard Chartered and Sunplus, forecast specific growth in tokenized asset market potentially reaching $30 trillion by 2034. As a pioneer in this evolving landscape, we are well-positioned to capitalize on this growth, leveraging our expertise and first-mover advantage. Our achievements to-date reflect a clear vision and disciplined approach to execution. With a strong balance sheet, innovative products, and expanding strategic relationships, we are well-positioned to drive sustainable growth and create long-term value for our shareholders.

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

Operator: Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Kent Engelke with Capitol Securities Management. Please proceed with your question.

Kent Engelke: Hey Wrendon, hey Jay. How is the marketing going on for the tokenized securities? And then secondly, you said it’s about a $30 trillion market, how much do you think that you all could capture of that market? And obviously, the market is in its infancy. Is there any correlation back to the catastrophic bond market or they started to try to create an ETF? Is there any correlation back to the cat market there?

Jay Madhu: Hey Ken, thanks for the question. Marketing efforts are going fine. What we’ve been targeting, though is two sides of things, right? Number one is the marketing, but also we’ve been coupling this with outreach getting — we currently find ourselves in somewhat of a no man’s world, so to speak. So, while we are a traditional finance SEC company, we are also going into the RWA space or the Web3 or RWA tokenization aspect of things. We find ourselves in the middle of both worlds. So, moving more towards the RWA space, attending the various different conferences, striking relationships with the various different players in this space, we are finding that we’re getting more adoption and more acceptance in that space because that’s the space we are pivoting towards.

It’s like turning a battleship, not a speedboat. And I think we’re doing that quite well. So, we’ve been focusing a lot in both directions because as we grow into SurancePlus 2.0, I think it’s critical that we get more adoption in that side of the world, right, and that piece of it. So, I think we’re doing well with that. As far as the $30 trillion business opportunity over here, the size of company we are currently, even if we got a small, very miniscule piece of that, that’s a game-changer for Oxbridge and SurancePlus. So, we continue effortlessly to move forward and I believe we’re making some good progress.

Kent Engelke: Great.

Operator: [Operator Instructions] Our next question comes from Allen Klee with Maxim Group. Please proceed with your question.

Allen Klee: Yes, hi. Okay. Congrats on a good solid quarter. Just following up on the last question on the marketing for the tokenizations. Could you tell us how to — what we should kind of look for in terms of information we could be hearing in the next three to six months?

Jay Madhu: Yes. Hi Alan, thanks for the question. I think we’re making some good progress. Well, time will tell. We’re not there at the end of it. But I believe we should be in good shape in terms of this next token launch. So, as you’re well aware, we have two sides of the token — two sets of tokens. One is our balance yield and one is our high-yield token. The high-yield, we’ve traditionally offered that and we target a 42% return. But what we’re finding is there’s a much larger audience out there that is probably looking for a more sustainable balance yield. And that’s what we’ve come out with our balance yield token of the 20% token. So, while it’s not completed, while we’re not at the end of the situation, I think we’re — time will tell, but so far, so good.

Allen Klee: That’s great. And then talk a little about just the reinsurance market, how you’re feeling about the kind of premiums and underwriting and then kind of the potential returns? Just how you’re thinking about the overall health of the market that you’re pursuing?

Jay Madhu: So, the — I’ll talk about the health of the market first, right? So, I think from what we’re seeing and what we’re hearing, premiums are — premiums seem to be in various different directions. And we still have — we’re still working through finalizing contracts and so on, and we won’t know that until probably the end of the month. But all directions are solid contracts, solid opportunities, solid premiums. In terms of underwriting, what we’ve also seen now majority of the business that we write is in the State of Florida and the various different things that Florida has implemented towards their underwriting situations and the AOB, which is assignment of benefits, et cetera, is playing out well in the — in situations as it comes to claims.

So, in years gone by, with either of these hurricanes that had gone through, it would have been a vastly different situation. Currently, with all the different changes that have come about in the — with the OIR has put through and the State of Florida has put through, it’s boding well for the various different insurance as well as reinsurance companies. So, again, we don’t have anything — we don’t have pure clarity as to where this goes. But so far, we have not been affected. So, I take solace with that. It doesn’t mean we don’t get an e-mail tomorrow or today after this call, right? But so far, so good. But at the end of the day, the marketing or the market that we’re after is a high-yield token. You don’t get a 42% return without taking risk.

So, this is something that every now and then will get affected. But traditionally, since 1952, 82% of the time, you don’t have a Category 3 hurricane. And sometimes — actually the last couple of years, we did have a Category 3 hurricane, but it didn’t make landfall. So, Category 3 in Florida, it needs to make landfall and it needs to hit a populated area. So, looking at these various different things, majority of the time, nothing happens. But sometimes when it does happen, it could go wrong. So, there’s that risk/reward with a 42% return token. So, while we have that, it’s a risk that is known and it’s a risk that is acceptable. The balance yield token, what we’re being told had the balance yield — had we had a balance yield token last year, that would be a non-event at the moment.

So, how things go are to be determined, but we are confident in where we are in the turn of the business in turning this battleship moving from the TradFi or the traditional finance business to the RWA or Web3 opportunity business, where we are taking an additional capital almost like the hedge fund model and putting it to work and getting capital as we go forward, attempt to get capital from anywhere in the world where we can do proper AML and KYC, put that monies to work. It’s a great thing for our business. Now, two things will come from that. One, we, the company, will have access to additional capital and put more monies to work and get — and grow the business opportunity together. But the flip side of things will be as additional capital comes into the RWA space into the tokenization space and more capital comes into the reinsurance space through tokenization, a few different things will happen; A, the companies that are doing that will do well.

But also the homeowner or the policyholders will achieve a slightly better rate as they go forward because there’s more capital coming into the ecosystem of reinsurance. It’s a win-win on both sides.

Allen Klee: Makes sense. Yes, and I’ve looked at, I’m sure you know well, too, some of the companies that have reported that do insurance in levered to Florida for their first quarter, good numbers and good outlook. So, that’s encouraging. In terms of the partnership you talked about, could you — that sounds like that could be a good distribution channel. Could you talk a little bit more about how this actually works?

Jay Madhu: Yes. So, the MOU that we signed with Plume, that could be a very good distribution channel because they have a highly evolved ecosystem. So, while we have Plume, we were in 2049 in Dubai. and we were on a panel invited by Midnight. Midnight is a new chain that’s coming out. It’s born from the Cardano chain. We were invited by the folks from Midnight, and we were also — and the folks from BitGo were also on that same panel. So, we are making some strides to where before we were standing from afar looking in the inside. Now, we are making some strides with some of the larger players in the ecosystem where they are recognizing there is a marked difference between crypto as opposed to tokenized securities. So, moving forward, I think we are in great shape in terms of the various different folks that we are working with, that’s SurancePlus 2.0, we’re evolving.

We’re moving more into that section. But while we are moving more in that direction, we are working within the framework of what the SEC allows us to do, the do’s and don’ts. We’re very careful to make sure that we color within the lines.

Allen Klee: That’s great. Okay, thank you very much.

Operator: [Operator Instructions] At this time, this concludes our question-and-answer session. I’d now like to turn the call back over to Mr. Madhu for closing remarks.

Jay Madhu: Thank you for joining us on the calls today — on the call today. 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 Oxbridge team whose extensive experience, expertise has been instrumental in navigating, and advancing our business, amidst these challenging circumstances. 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 any time. Once again, thank you for your time and attention today and for your ongoing interest in Oxbridge. Operator?

Operator: Before we conclude today’s call, I’d 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.