Transcript
Good afternoon, and welcome to Oxbridge Re's Second Quarter 2025 Earnings Call. My name is Dine, and I will be your conference operator this afternoon. Joining us for today's presentation is Oxbridge Re's Chairman, President, Chief Executive Officer, Jay Madhu; and Chief Financial Officer and Corporate Secretary, Wrendon Timothy. Following their remarks, we will open the call for your questions. I want to remind everyone that this call will be available via telephone replay until August 28, 2025. Details for the 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 Re, who will provide the necessary cautions regarding the forward-looking statements that will be made by management during this call. Over to you, sir.
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 rules 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 are included in the section entitled Risk Factors contained in our Form 10-K filed on 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 could 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'd like to turn the call over to our Chairman, President and Chief Executive Officer, Jay Madhu. Jay?
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. While we are solidly entrenched in the RWA Web3 space where we issue tokenized reinsurance securities in real-world assets, our core business remains reinsurance where we write fully collateralized policies to cover property loss 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 exist 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 have begun to diversify our business in 2022. We expanded our business portfolio by establishing SurancePlus Inc., our new subsidiary focused on RWA Web3 technology. SurancePlus specializes in democratizing tokenized real-world assets, 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. This initiative aims to broaden investor participation, extending our opportunities beyond what traditionally has been a select group of ultra-high net worth individuals. We are enthusiastic about the prospects of these two new investments and remain committed to keeping our stakeholders informed of our progress in the forthcoming quarters. Looking ahead, we intend to position Oxbridge as a prominent player in the real-world asset 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'll now turn things over to Wrendon to take us through our financial results. Wrendon?
Thank you, Jay. I would like to remind you that our typical contract period is from June 1 to May 31 of the following year. With respect to net premiums earned, net premiums earned for the quarter ended June 30, 2025 increased to $582,000 from $564,000 for the quarter ended June 30, 2024. Net premiums earned for the six months ended June 30, 2025 increased to $1.18 million from $1.1 million for the six months ended June 30, 2024. The increases are due to higher rates on contracts that were in force in the three and six-month periods ended June 30, 2025 when compared to the contracts in force in the prior year periods. Our net investment income and other income for the three months ended June 30, 2025 increased to $93,000 from $66,000 in the prior year second quarter. These factors combined resulted in total revenues of $654,000 for the three months ended June 30, 2025, compared to $44,000 in the prior year second quarter. Our net investment and other income for the six months ended June 30, 2025 increased to $173,000 from $126,000 in the prior year period. These factors taken together resulted in total revenues of $1.36 million for the six months ended June 30, 2025, compared to a loss of $81,000 in the prior year comparable period. For the quarter ended June 30, 2025, total expenses, which comprise loss and loss adjustment expenses, policy acquisition costs and general and administrative expenses, increased to $2.61 million from $628,000 for the quarter ended June 30, 2024. For the six months ended June 30, 2025, total expenses increased to $4.18 million from $1.18 million for the six months ended June 30, 2024. These increases are primarily due to the adverse development and loss recognition from Hurricane Milton on one of our reinsurance contracts, coupled with increased human resources and personnel costs, professional marketing, investor relations costs, our Web3 subsidiary tokenization costs, renewed S-3 related costs and legal expenditures when compared with prior year periods. Our net loss for the quarter ended June 30, 2025 was $1.87 million or $0.25 per basic and diluted loss per share, compared to a net loss of $821,000 or $0.14 per basic and diluted loss per share for the quarter ended June 2024. Net loss for the six months ended June 30, 2025 was $2.01 million or $0.28 basic and diluted loss per share, compared to a net loss of $1.73 million or $0.29 per basic and diluted loss per share for the six months ended June 30, 2024. The increases again are primarily due to the adverse development and loss recognition from Hurricane Milton on one of our reinsurance contracts during the three and six-month periods ended June 30, 2025 when compared with prior periods. As we have discussed before in our investor calls, we use various measures to analyze the growth and profitability of our business operations. For our reinsurance business, we measure underwriting profitability by determining our loss ratio, acquisition ratio, expense ratio and combined ratio. Our loss ratio, which measures underwriting profitability, is the ratio of loss and loss adjustment expenses incurred to net premiums earned. The loss ratio increased to 394% and 194.8% for the quarter and six-month periods ended June 30, 2025, respectively, when compared with the prior comparative period. This was due to the full limit loss of approximately $2.3 million on one of our reinsurance contracts affected by Hurricane Milton. The net impact of Hurricane Milton's loss on the company's equity, however, after accounting for the portion of losses borne by external token holders, was approximately $1.2 million. Our acquisition cost ratio, which measures operational efficiency, compares policy acquisition costs to net premiums earned. The acquisition cost ratio remained consistent at approximately 11% for the quarter ended and six months ended June 30, 2025 when compared with the quarter and six-month period ended June 30, 2024. Our expense ratio, which measures operating performance, compares policy acquisition costs and general and administrative expenses with net premiums earned. For the quarter ended June 30, 2025, the expense ratio increased to 227% from 111.3% from the quarter ended June 30, 2024. For the six-month period ended June 30, 2025, the expense ratio increased to 160.7% from 105.7% for the six months period ended June 30, 2024. The increases are primarily due to increased professional costs related to investor relations and our Web3 subsidiary marketing and operations, renewed S-3 related costs, increased human resources and personnel costs, and legal expenditures during the quarter and six-month periods ended June 30, 2025 when compared with prior comparable periods. Our combined ratio, which is used to measure underwriting performance, is the sum of the loss ratio and the expense ratio. The combined ratio increased to 621% from 111.3% for the quarter ended June 30, 2024. For the six-month period ended June 30, 2025, the combined ratio increased to 355.5% from 105.7% for the six-month period ended June 30, 2024. The increase again is primarily due to losses incurred from Hurricane Milton and increased general and administrative expenses during the three and six-month period ended June 30, 2025 when compared with the prior comparable periods. Now turning to the balance sheet. Our investment portfolio decreased to $104,000 at June 30, 2025 from $113,000 at the prior year-end, primarily due to the decrease in fair value of equity securities during the six-month period ended June 30, 2025. Cash and cash equivalents and restricted cash and cash equivalents increased by $760,000 or 12.9% to $6.7 million from $5.9 million as of December 31, 2024. The increase is a net result of premium deposits made during the six months ended June 30, 2025, the registered direct offering that generated $2.7 million net of expenses and payment of Hurricane Milton losses and general administrative expenses during the period. I'll now turn the call back over to Jay to wrap up before we take any questions. Jay?
Thank you, Wrendon. This quarter marks a pivotal moment for Oxbridge and SurancePlus. We've not only expanded our footprint in the rapidly growing tokenized reinsurance market, but also forged strategic partnerships that position us for accelerated growth. As the first Nasdaq-listed company to issue a tokenized reinsurance security, we are proving that innovation and compliance can go hand in hand, creating new opportunities for investors and setting a high standard for the industry. To further accelerate our strategy and strengthen our leadership position, we have scheduled an Extraordinary General Meeting to approve measures that will accelerate our strategy and strengthen our leadership. These initiatives combined with our ongoing focus on transparency position us to capture significant opportunities in the quarters ahead. Building on our Memorandum of Understanding with Plume last quarter, a leading real-world asset platform with an institutional-grade tokenization infrastructure and a track record in scaling compliant blockchain solutions, we have now entered into a strategic partnership with Midnight Foundation, which is an Input Output Growth company, the same founders of Cardano. The Midnight Foundation supports ecosystem growth and enterprise adoption of the Midnight Network, a private-focused blockchain developed by Shielded Technologies, a subsidiary of Input Output Global, the team behind Cardano again. Today, these alliances expand SurancePlus' reach, strengthen distribution capabilities, and position our platform at the forefront of blockchain-enabled RWA innovation. We have advanced our 2025 and 2026 tokenized reinsurance offerings, which provide some diversity of investment opportunities within the $760 billion reinsurance market, a sector uncorrelated to broader capital markets. Our balanced-yield product targets a 20% annual return and our high-yield product targets a 42% annual return, assuming no underlying losses. By delivering compliant blockchain-powered pathways into this traditionally elusive asset class, we are broadening investor participation and reinforcing our mission to democratize reinsurance investment. This year, we have been an active participant and sponsor at leading blockchain and RWA events globally, including iConnect in Miami, ETHDenver 2025 and RWA Day in Denver, Apex Invest 2025 in the Cayman Islands, Token2049 in Dubai, Money20/20 in Europe, in Amsterdam, Permissionless IV and Yield Day NYC in New York and EthCC in Cannes and Rare Evo recently in 2025, again, in Las Vegas. These forums provide an opportunity to showcase SurancePlus, strengthen industry leadership, sign new partnerships, and explore collaborative opportunities with leading blockchain platforms. Our achievement in the quarter reflects a disciplined approach to execution and a clear vision of the future. With a strong balance sheet, innovative products, and an expanding network of strategic relationships, Oxbridge is well positioned to drive sustainable growth, create long-term shareholder value and lead the tokenized reinsurance market into its next phase of evolution. With that, we are ready to open the call for questions. Operator, please provide the appropriate instructions.
The first question that we have comes from Allen Klee of Maxim Group.
Congratulations on your premium growth. I'm interested in your activity at conferences. What insights can you share from your experiences at those events?
Yes, first of all, thank you, Allen, for joining the call and for your attention. Conferences are essential because they bring together various stakeholders within the ecosystem. Being visible at these events is crucial. We not only gather valuable insights but also engage with others about how we can create value through collaboration. One key takeaway from these conferences is that investors are particularly interested in compliance and transparency. While everyone is eager to see yield, they also want to understand the compliance and transparency aspects of our tokenized products. They ask questions about our leverage practices and the opportunities we offer. It's often surprising for them to learn that we do not use leverage on our products; it's a one-to-one basis, and we maintain total transparency regarding compliance. SurancePlus has PCAOB-audited financials, as does Oxbridge, ensuring everything is consistent. SurancePlus also has segregated PCAOB-audited financials, which is crucial for maintaining compliance. We are making significant progress and exploring new opportunities. We have opened several doors, some of which we have already announced, while others are still in development, which I believe will be very interesting moving forward. Overall, it's vital to be active in this space, but it's even more important to ensure we have the right mix of people involved.
That's great. You talked about an upcoming EGM meeting and some proposals. Could you elaborate on that, please?
Yes, we are always very transparent and open. We have previously shared that we are looking to enter the blockchain and RWA spaces more significantly. This involves not only planning for the future but also ensuring we have the right partners in place and that the timing is suitable. It is crucial that when the time comes, everything is organized and ready. The upcoming EGM is focused on making certain that we set up the necessary foundations, rather than just hoping for the best when the moment arrives. The blockchain and crypto space has garnered a lot of attention from the current administration, which has recently highlighted the RWA space as well. We are positioned right in the middle of this opportunity. To give you context, the total addressable market for reinsurance is $700 billion, while the market for stablecoins is $150 billion. So, reinsurance represents a $750 billion market. We are working towards compliance, transparency, and establishing the right partnerships to ensure we move in the right direction.
At this time, this concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Madhu for any closing remarks. Please go ahead, sir.
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 experience 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 or before. 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.
Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.