OXBRIDGE RE HOLDINGS LIMITED — Q1 2020 Form 10-Q
Business context and reporting period
Oxbridge Re is a Cayman Islands specialty reinsurer focused on fully collateralized property-casualty catastrophe risks, primarily in the U.S. Gulf Coast and Florida. The filing covers the three months ended March 31, 2020; financial amounts below are in thousands of U.S. dollars unless stated otherwise.
Financial results and position
| Metric | Q1 2020 | Q1 2019 |
|---|---|---|
| Net premiums earned | $264 | $0 |
| Net investment income | $33 | $63 |
| Change in fair value of equity securities | $(326) | $51 |
| Total revenue | $(23) | $117 |
| Total expenses | $275 | $264 |
| Net loss | $(364) | $(147) |
| Loss per share, basic and diluted | $(0.06) | $(0.03) |
- The $326 fair-value loss on equity securities was the principal driver of the larger quarterly loss; management attributed it to depressed markets during the COVID-19 pandemic.
- No losses or loss-adjustment expenses were incurred in either quarter. Q1 2020 acquisition and underwriting costs were $29; general and administrative expense was $246, down $18 year over year.
- The reported Q1 2020 combined ratio was 104.2% (loss ratio 0.0%; acquisition cost ratio 11.0%). The prior-year ratios were shown as zero because there were no net premiums earned, so the comparison is not meaningful.
- At March 31, total assets were $9,048, down from $9,495 at year-end; shareholders’ equity was $7,687, down from $8,043. Equity securities were carried at $972, versus cost of $1,321.
- Cash and cash equivalents were $5,068 and restricted cash was $2,343, totaling $7,411, down $605 from December 31. Restricted funds collateralize reinsurance obligations.
- Operating cash use was $4, versus $4,251 in Q1 2019; investing cash use was $601, primarily for equity purchases. No financing cash flows were reported.
- Notes payable to participating noteholders were $600, unchanged from year-end; the Series 2019-1 notes mature June 1, 2022. The filing describes these notes as issued by the consolidated sidecar, Oxbridge Re NS.
Changes, outlook, risks, and unusual items
- Earned premiums increased from zero, which management attributed to normal premium recognition in Q1 2020; the prior-year period reflected accelerated recognition after full-limit losses on all reinsurance contracts.
- Management said COVID-19 could affect insured losses, investment values, interest rates, reinsurance pricing, and future business, with the ultimate impact uncertain. It reported no material disruption to operations after moving staff to remote work.
- No numerical earnings or revenue guidance was provided. Management expects liquidity needs to be met by cash, investment income, and underwriting activity, and said it had no plans to issue debt; future equity offerings remain possible.
- Key exposures include catastrophe losses, underwriting concentration—substantial business ultimately relates to two entities—counterparty and broker credit risk, equity-market volatility, and uncertainty in loss reserves. No loss reserve was recorded at quarter-end.
- The filing reports subsidiary net worth of approximately $1.3 million for Oxbridge Reinsurance Limited and $129,000 for Oxbridge Re NS, and states each exceeded a minimum capital requirement of $500. Because these figures appear inconsistent if the requirement is $500,000, the filing text does not provide a clear reconciliation.
- No litigation, off-balance-sheet arrangements, or subsequent events requiring disclosure were reported. Management stated disclosure controls were effective and there were no material changes to internal control over financial reporting.
Important facts for investors to verify
- How much of the $326,000 equity fair-value loss was market-wide versus security-specific, and whether further valuation declines occurred after quarter-end.
- Current catastrophe exposure and renewal pricing, particularly given the concentration in two underlying entities and the upcoming hurricane season.
- The subsidiary regulatory-capital figures and the stated $500 minimum requirement, including whether the amounts are in thousands.
- The liquidity available for claims after excluding restricted collateral, and the terms and loss-allocation mechanics of the $600,000 Series 2019-1 notes.
- Whether COVID-19 causes claims, premium collection delays, or operational and investment impacts beyond those described at the filing date.