Oxbridge Re Holdings Ltd

NASDAQ:OXBR

Earnings Call Transcript

[Operator]

Good afternoon. Welcome to Oxbridge's Third Quarter 2025 Earnings Call. My name is Rochelle, and I will be your conference operator this afternoon. [Operator Instructions] Joining us for today's presentation is Oxbridge'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 now like to remind everyone that this call will be available via telephone replay until November 20, 2025. Details for telephone replay are included in the press release issued today.

Now I would like to turn the call over to Wrendon Timothy, Chief Financial Officer of Oxbridge, who will provide the necessary cautions regarding the forward-looking statements that will be made by management during this call. Please go ahead.

[Wrendon Timothy, executive]

Thank you, operator. During today's call, there will be forward-looking statements made regarding future events, including Oxbridge 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 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 could, in turn, cause significant market price and trading volume fluctuations for our 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 would like to turn the call over to our Chairman, President and Chief Executive Officer, Jay Madhu. Jay?

[Sanjay Madhu, executive]

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 innovate our business by bringing reinsurance on chain and broadening investor access. While we remain solidly rooted in our core reinsurance business, underwriting fully collateralized policies that cover property losses from specific catastrophes, we continue to compete effectively with large carriers by focusing on selective data-driven underwriting.

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. We specialize in low frequency, high severity risk where sufficient data exists to analyze the risk return profile with discipline.

We are intentional about risk selection, pricing and structure, and we maintain full collateralization to protect counterparties and ensure transparency. Building on this foundation, in 2022, we started SurancePlus, our Web3 real-world asset or RWA subsidiary dedicated to bringing reinsurance on chain.

SurancePlus specializes in democratizing tokenized real-world assets or RWAs, offering tokenized reinsurance securities as alternative investment opportunities. These securities leverage blockchain technology to support transparency and regulatory compliance, representing a meaningful advantage in the digital securities market. This initiative is designed to broaden investor participation, intending opportunities beyond what traditionally has been a select group of ultra-high net worth investors.

We believe we are the first publicly traded company to issue tokenized reinsurance securities. We are advancing this focus and momentum. Our blend of disciplined underwriting and modern compliant technology is positioning Oxbridge for the opportunities ahead.

Looking ahead, we remain focused on expanding Oxbridge's presence in the RWA and 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 comprehensively. I will turn things over now to Wrendon to take us through our financial results. Wrendon?

[Wrendon Timothy, executive]

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. Net premiums earned for the quarter ended September 30, 2025, decreased to $555,000 from $595,000 for the quarter ended September 30, 2024. The decrease is due to lower weighted average rate on reinsurance contracts in force during the quarter ended September 30, 2025, when compared with the prior period.

Net premiums earned for the 9-month period ended September 30, 2025, increased to $1.73 million from $1.71 million for the 9-month period ended September 30, 2024. The increase is due to higher weighted average rate on reinsurance contracts in force during the 9-month period ended September 30, 2025, when compared to the prior period.

Our net investment income and other income for the 3 months ended September 30, 2025, increased to $79,000 from $62,000 from prior year third quarter. There was an increase in the fair value of equity securities during this period of $11,000. And along with net premiums, our total revenue amounted to $645,000 for the 3-month period ended September 30, 2025, compared to $205,000 in the prior year third quarter.

Our net investment and other income for the 9 months ended September 30, 2025, increased to $251,000 from $188,000 from the prior period. The lower net premiums and along with the change in the fair value of equity securities and other investments resulted in total revenues of $2 million for the 9-month period ended September 30, 2025, compared to $124,000 in the prior year.

For the 3 months ended September 30, 2025, total expenses, including policy acquisition costs general and admin expenses increased to $815,000 from $498,000 for the quarter ended September 30, 2024. The increase is primarily due to increased professional costs related to Investor Relations, our Web3 subsidiary tokenization costs, S-3 related costs, increased human resource and personnel costs and legal expenditures when compared with prior comparable period.

For the 9 months ended September 30, 2025, total expenses, including policy acquisition costs, loss and loss adjustment expenses and general and admin expenses increased to $4.99 million from $1.67 million for the 9 months ended September 30, 2024. The increase is primarily due to the recording of full limit loss on one of our reinsurance contracts during the quarter ended June 30, 2025, along with increased professional costs, increased human resource and personnel costs and legal expenditures.

Net income for the quarter ended September 30, 2025, was $187,000 or $0.02 to basic and diluted loss per share compared to a net loss of $540,000 or $0.09 basic and diluted loss per share for the quarter ended September 30, 2024. The decrease in net loss is primarily due to the decrease in the unrealized loss on other investments during the quarter ended September 30, 2025, when compared with the prior period.

Net loss for the 9 months ended September 30, 2025, was $2.19 million or $0.30 basic and diluted loss per share compared to a net loss of $2.7 million or $0.37 basic and diluted loss per share for the 9 months ended September 30, 2024.

Again, the decrease in net loss is primarily due to the decrease in unrealized loss on other investments in the 9-month period ended September 30, 2025, when compared with the prior period.

As we have discussed before on investor calls, we use various measures to analyze the growth and profitability of our business operations. 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 includes net premiums.

Loss ratio. The loss ratio is the ratio of loss adjustment expenses incurred the premiums earned and measures the underwriting profitability of our reinsurance business. The loss ratio remained consistent at 0% for the 3-month period ended September 30, 2025, when compared with the prior comparative period. The loss ratio, however, increased to 132.4% for the 9-month period ended September 30, 2025, when compared with the prior comparative period. This was due again to the full limit loss on one of our reinsurance contracts affected by Hurricane Milton.

Our acquisition cost ratio, which measures operational efficiency, compares policy acquisition costs to net premiums earned. The acquisition cost ratio remained consistent at 11% for the quarter and 9-month period ended September 30, 2025, when compared to the prior comparative period.

The expense ratio, which measures operating performance compares policy acquisition costs and general and admin expenses with net premiums earned. For the quarter ended September 30, 2025, the expense ratio increased to 146.8% from 83.7% for the 3-month period ended September 30, 2024. For the 9-month period ended September 30, 2025, the expense ratio increased to 156.2% from 98% for the 9-month period ended September 30, 2024. The increase is primarily due to the increased professional costs related to the investor relating to Investor Relations of overseas subsidiary, marketing and operations, renewed S-3 related costs, increased human resources, personnel and legal expenditures during the quarter ended September 30, 2025, when compared with prior comparable period.

Now turning to the balance sheet. Our investment portfolio increased to $115,000 at September 30, 2025, from $113,000 at the prior year-end, primarily due to the increase in fair value of the equity securities during the 9-month period ended September 30, 2025.

Cash and cash equivalents and restricted cash and cash equivalents increased by $1.28 million to $7.18 million from $5.9 million at December 31, 2024. The increase is the net result of premium deposits during the 9-month period ended September 30, 2025, the registered direct offering that generated $2.7 million net of expenses and payment of Hurricane Milton losses and general and admin expenses.

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

[Sanjay Madhu, executive]

Thank you, Wrendon. We are encouraged by the compelling performance of our 2025, 2026 tokenized reinsurance contracts. The Balanced Yield Token, EtaCat Re is on pace to achieve approximately 25%, exceeding its 20% target, while the High Yield Token, ZetaCat Re remains on track to achieve its 42% return target. These results reflect disciplined underwriting and show how our tokenized platform is delivering attractive high-quality uncorrelated returns within the $750 billion TAM for reinsurance.

Equally important, our structure is built for transparency and alignment. We write fully collateralized one-on-one contracts and do not use leverage. Our risk selection focuses on low frequency, high severity perils, where the data support rigorous analysis for expected loss and trail risk -- tail risk, pardon me.

Tokenization provides compliant digital access and enables clearer, more frequent reporting for investors. Looking ahead, we are evaluating a move towards regular dividend payouts for our security-backed CatRe tokens, moving away from a purely annual payout model. This new approach aligns with current Web3 market demand and investor preference.

Consistent presence at marquee industry events continues to expand our partner platform and investor pipeline and elevate awareness across traditional finance and Web3. Since the prior quarter updates, we have participated in TOKEN2049 in Singapore, Rare Evo, which is in Las Vegas and Spectrum Cayman in Grand Cayman.

Operationally, we are focused on 3 priorities: one, maintaining underwriting quality and diversification across cedents and perils; two, scaling compliant distribution channels that support broadened investor participation; and three, advancing product enhancements such as regular dividends that improve accessibility without compromising risk controls.

Taken together, these efforts position Oxbridge and SurancePlus to deepen our roles in bringing reinsurance returns on chain. With continued discipline, strategic relationships and technology-driven product innovation, we remain focused on building long-term shareholder value and expanding investor access to this unique uncorrelated asset class. With that, we are open to calls for questions.

[Operator]

[Operator Instructions] And it appears there are no questions. I will turn the call back over to the speakers for any additional or closing remarks.

[Sanjay Madhu, executive]

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 Oxbridge team whose extensive 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]

Thank you. That will conclude today's call. We thank you for your participation. You may now disconnect.