OXBRIDGE RE HOLDINGS Ltd 10-Q for FY2020 Q3
OXBRIDGE RE HOLDINGS Ltd (OXBR)
10-Q
2020-11-10
For: 2020-09-30
View Original
Added on
April 06, 2026
About this 10-Q
OXBRIDGE RE HOLDINGS Ltd filed this 10-Q on November 10, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).
Headline figures
Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $259K
- down 26.0% from $350K a year earlier
- Net loss
- $33K
- compared with a net loss of $15K a year earlier
- Diluted EPS
- -$0.01
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark
One)
[X]
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
quarterly period ended September 30, 2020
[
]
TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
transition period from __________ to __________
Commission
File Number: 1-36346
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OXBRIDGE RE HOLDINGS LIMITED
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(Exact
name of registrant as specified in its charter)
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Cayman
Islands
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98-1150254
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(State
or other jurisdiction of
incorporation
or organization)
|
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(I.R.S.
Employer
Identification
No.)
|
|
|
|
|
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Suite
20142 Edward Street, GeorgetownP.O. Box 469
Grand
Cayman, Cayman Islands
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KY1-9006
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (345) 749-7570
|
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days..
Yes
X
No
Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files).
Yes
X
No
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller
reporting company”, and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
|
Large
accelerated
filer
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Accelerated
filer
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Non-accelerated
filer
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Smaller
reporting
company
X
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Emerging growth
company
|
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If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ______
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).
Yes
No
X
Indicate
the number of shares outstanding of each of the issuer’s
classes of common stock, as of the latest practicable
date.
As of
November 10, 2020; 5,733,587 ordinary shares, par value $0.001 per
share, were outstanding.
OXBRIDGE RE HOLDINGS LIMITED
INDEX
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Page
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3
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4
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5
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6
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8
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9
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28
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39
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39
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39
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39
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40
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40
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40
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40
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41
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42
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2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheets
(expressed in thousands of U.S. Dollars, except per share and share
amounts)
|
|
At September 30, 2020
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At December 31, 2019
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(Unaudited)
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Assets
|
|
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Equity securities,
at fair value (cost of $1,001 and $715 respectively)
|
$635
|
692
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Cash
and cash equivalents
|
5,686
|
5,962
|
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Restricted
cash and cash equivalents
|
1,693
|
2,054
|
|
Accrued
interest and dividend receivable
|
1
|
12
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Premiums
receivable
|
692
|
506
|
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Deferred
policy acquisition costs
|
72
|
48
|
|
Operating
lease right-of-use assets
|
242
|
133
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Prepayment
and other assets
|
69
|
79
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Property
and equipment, net
|
16
|
9
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|
Total
assets
|
$9,106
|
9,495
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Liabilities and Shareholders’ Equity
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Liabilities:
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Notes
payable
|
$216
|
600
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Unearned
premiums reserve
|
658
|
440
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Operating
lease liabilities
|
243
|
133
|
|
Accounts
payable and other liabilities
|
154
|
279
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Total
liabilities
|
1,271
|
1,452
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Shareholders’
equity:
|
|
|
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Ordinary
share capital, (par value $0.001, 50,000,000 shares authorized;
5,733,587 shares issued and outstanding)
|
6
|
6
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Additional
paid-in capital
|
32,286
|
32,262
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Accumulated
Deficit
|
(24,457)
|
(24,225)
|
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Total
shareholders’ equity
|
7,835
|
8,043
|
|
Total
liabilities and shareholders’ equity
|
$9,106
|
9,495
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The
accompanying Notes to Consolidated Financial Statements are an
integral
part of
the Consolidated Financial Statements.
3
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(expressed in thousands of U.S. Dollars, except per share
amounts)
|
|
Three Months Ended
|
Nine Months Ended
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||
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|
September 30,
|
September 30,
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2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
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Revenue
|
|
|
|
|
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Assumed
premiums
|
$-
|
-
|
864
|
1,116
|
|
Change
in unearned premiums reserve
|
247
|
279
|
(218)
|
(744)
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|
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|
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Net
premiums earned
|
247
|
279
|
646
|
372
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Net
investment and other income
|
32
|
54
|
90
|
182
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Net
realized investment (losses)/gains
|
(2)
|
-
|
325
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3
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Change
in fair value of equity securities
|
(18)
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17
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(343)
|
20
|
|
|
|
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Total
revenue
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259
|
350
|
718
|
577
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Expenses
|
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Policy
acquisition costs and underwriting expenses
|
27
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31
|
71
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41
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General
and administrative expenses
|
239
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264
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767
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808
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Total
expenses
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266
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295
|
838
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849
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(Loss)/Income
before income attributable to noteholders
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(7)
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55
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(120)
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(272)
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Income
attributable to noteholders
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(26)
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(70)
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(112)
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(94)
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Net
loss
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$(33)
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(15)
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(232)
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(366)
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Loss per share
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Basic
and Diluted
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$(0.01)
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(0.00)
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(0.04)
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(0.06)
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Weighted-average shares outstanding
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Basic
and Diluted
|
5,733,587
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5,733,587
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5,733,587
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5,733,587
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Dividends paid per share
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$-
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-
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-
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-
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The
accompanying Notes to Consolidated Financial Statements are an
integral
part of
the Consolidated Financial Statements.
4
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statements of Comprehensive Loss
(Unaudited)
(expressed in thousands of U.S. Dollars)
|
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Three Months Ended
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Nine Months Ended
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||
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September 30,
|
September 30,
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2020
|
2019
|
2020
|
2019
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|
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Net
loss
|
$(33)
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(15)
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(232)
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(366)
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Other
comprehensive loss:
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Change
in unrealized loss on investments:
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Unrealized
gain arising during the period
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-
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-
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-
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1
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Reclassification
adjustment for net realized investment gains included in net
loss
|
-
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-
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-
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(3)
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Net
change in unrealized loss
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-
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-
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-
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(2)
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Total
other comprehensive loss
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-
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-
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-
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(2)
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Comprehensive
loss
|
$(33)
|
(15)
|
(232)
|
(368)
|
The
accompanying Notes to Consolidated Financial Statements are an
integral
part of
the Consolidated Financial Statements.
5
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statements of Cash
Flows
(Unaudited)
(expressed in thousands of U.S. Dollars)
|
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Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
2020
|
2019
|
|
Operating activities
|
|
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Net
loss
|
$(232)
|
(366)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
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Stock-based
compensation
|
24
|
27
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Depreciation
and amortization
|
7
|
7
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Net
realized investment gains
|
(325)
|
(3)
|
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Change
in fair value of equity securities
|
343
|
(20)
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|
Change
in operating assets and liabilities:
|
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|
|
Accrued
interest and dividend receivable
|
11
|
4
|
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Premiums
receivable
|
(186)
|
(837)
|
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Deferred
policy acquisition costs
|
(24)
|
(82)
|
|
Net
change in operating leases
|
1
|
-
|
|
Prepayment
and other assets
|
10
|
1
|
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Reserve
for losses and loss adjustment expenses
|
-
|
(4,001)
|
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Unearned
premiums reserve
|
218
|
744
|
|
Accounts
payable and other liabilities
|
(125)
|
87
|
|
|
|
|
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Net
cash used in operating activities
|
$(278)
|
(4,439)
|
|
|
|
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Investing activities
|
|
|
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Purchase
of equity securities
|
(2,390)
|
(402)
|
|
Proceeds
from sale of equity securities
|
2,429
|
-
|
|
Proceeds
from sale of fixed-maturity securities
|
-
|
994
|
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Purchase
of property and equipment
|
(14)
|
-
|
|
|
|
|
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Net
cash provided by investing activities
|
$25
|
592
|
|
|
|
|
|
Financing activities
|
|
|
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Proceeds
on issuance of notes
|
216
|
600
|
|
Redemption
of notes
|
(600)
|
-
|
|
|
|
|
|
Net
cash (used in)/provided by financing activities
|
$(384)
|
600
|
|
|
|
|
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|
(continued)
|
|
6
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statements of Cash Flows, continued
(Unaudited)
(expressed in thousands of U.S. Dollars)
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
|
2020
|
2019
|
|
|
|
|
|
Cash
and cash equivalents, and restricted cash and cash
equivalents:
|
|
|
|
Net
change during the period
|
(637)
|
(3,247)
|
|
Balance,
beginning of period
|
8,016
|
11,299
|
|
|
|
|
|
Balance,
end of period
|
$7,379
|
8,052
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
Interest
paid
|
-
|
-
|
|
Income
taxes paid
|
-
|
-
|
|
|
|
|
|
Non-cash investing activities
|
|
|
|
Net
change in unrealized gain on securities available for
sale
|
-
|
(2)
|
|
Operating
lease right-of-use assets
|
169
|
140
|
|
Operating
lease liabilities
|
169
|
140
|
The
accompanying Notes to Consolidated Financial Statements are an
integral
part of
the Consolidated Financial Statements.
7
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders’ Equity (unaudited)
Three and Nine Months Ended September 30, 2020 and
2019
(expressed in thousands of U.S. Dollars, except share
amounts)
|
|
Ordinary Share Capital
|
Additional Paid-in
|
Accumulated
|
Accumulated Other
|
Total Shareholders'
|
|
|
|
Shares
|
Amount
|
Capital
|
Deficit
|
Comprehensive Income/(Loss)
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2018
|
5,733,587
|
6
|
32,226
|
(23,920)
|
2
|
8,314
|
|
Net
loss for the period
|
-
|
-
|
-
|
(146)
|
-
|
(146)
|
|
Stock-based
compensation
|
-
|
-
|
9
|
-
|
-
|
9
|
|
Total
other comprehensive loss
|
-
|
-
|
-
|
-
|
(2)
|
(2)
|
|
Balance
at March 31, 2019
|
5,733,587
|
6
|
32,235
|
(24,066)
|
-
|
8,175
|
|
Net
loss for the period
|
-
|
-
|
-
|
(205)
|
-
|
(205)
|
|
Stock-based
compensation
|
-
|
-
|
9
|
-
|
-
|
9
|
|
Balance
at June 30, 2019
|
5,733,587
|
6
|
32,244
|
(24,271)
|
-
|
7,979
|
|
Net
loss for the period
|
-
|
-
|
-
|
(15)
|
-
|
(15)
|
|
Stock-based
compensation
|
-
|
-
|
9
|
-
|
-
|
9
|
|
Balance
at September 30, 2019
|
5,733,587
|
6
|
32,253
|
(24,286)
|
-
|
7,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2019
|
5,733,587
|
6
|
32,262
|
(24,225)
|
-
|
8,043
|
|
Net
loss for the period
|
-
|
-
|
-
|
(364)
|
-
|
(364)
|
|
Stock-based
compensation
|
-
|
-
|
8
|
-
|
-
|
8
|
|
Balance
at March 31, 2020
|
5,733,587
|
6
|
32,270
|
(24,589)
|
-
|
7,687
|
|
Net
income for the period
|
-
|
-
|
-
|
165
|
-
|
165
|
|
Stock-based
compensation
|
-
|
-
|
8
|
-
|
-
|
8
|
|
Balance
at June 30, 2020
|
5,733,587
|
6
|
32,278
|
(24,424)
|
-
|
7,860
|
|
Net
loss for the period
|
-
|
-
|
-
|
(33)
|
-
|
(33)
|
|
Stock-based
compensation
|
-
|
-
|
8
|
-
|
-
|
8
|
|
Balance
at September 30, 2020
|
5,733,587
|
6
|
32,286
|
(24,457)
|
-
|
7,835
|
The
accompanying Notes to Consolidated Financial Statements are an
integral
part of
the Consolidated Financial Statements.
8
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
1.
ORGANIZATION AND BASIS OF PRESENTATION
(a)
Organization
Oxbridge Re
Holdings Limited (the “Company”) was incorporated as an
exempted company on April 4, 2013 under the laws of the Cayman
Islands. Oxbridge Re Holdings Limited owns 100% of the equity
interest in Oxbridge Reinsurance Limited, an exempted entity
incorporated on April 23, 2013 under the laws of the Cayman Islands
and for which a Class “C” Insurer’s license was
granted on April 29, 2013 under the provisions of the Cayman
Islands Insurance Law. Oxbridge Re Holdings Limited also owns 100%
of the equity interest in Oxbridge Re NS, an entity incorporated as
an exempted company on December 22, 2017 under the laws of the
Cayman Islands to function as a reinsurance sidecar facility and to
increase the underwriting capacity of Oxbridge Reinsurance Limited.
The Company, through its subsidiaries (collectively “Oxbridge
Re”) provides collateralized
reinsurance in the property catastrophe market and invests in
various insurance-linked securities. The Company operates as a
single business segment through its wholly-owned subsidiaries. The
Company’s headquarters and principal executive offices are
located at Suite 201, 42 Edward Street, Georgetown, Grand Cayman,
Cayman Islands, and have their registered offices at P.O.
Box 309, Ugland House, Grand Cayman, Cayman Islands.
The
Company’s ordinary shares and warrants are listed on The
NASDAQ Capital Market under the symbols “OXBR” and
“OXBRW,” respectively.
(b)
Basis
of Presentation and Consolidation
The
accompanying unaudited, consolidated financial statements of the
Company have been prepared in accordance with accounting principles
generally accepted in the United States of America
(“GAAP”) for interim financial information, and the
Securities and Exchange Commission (“SEC”) rules for
interim financial reporting. Certain information and
footnote disclosures normally included in the consolidated
financial statements prepared in accordance with GAAP have been
omitted pursuant to such rules and regulations. However, in
the opinion of management, the accompanying interim consolidated
financial statements reflect all normal recurring adjustments
necessary to present fairly the Company’s consolidated
financial position as of September 30, 2020 and the consolidated
results of operations and cash flows for the periods presented. The
consolidated results of operations for interim periods are not
necessarily indicative of the results of operations to be expected
for any
subsequent interim period or for the fiscal year ended
December 31, 2020. The accompanying unaudited consolidated
financial statements and notes thereto should be read
in conjunction with the audited consolidated financial statements
for the year ended December 31, 2019 included in the
Company’s Form 10-K, which was filed with the SEC on March
23, 2020.
In
preparing the interim unaudited consolidated financial statements,
management was required to make certain estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues,
expenses and related disclosures at the financial reporting date
and throughout the periods being reported upon. Certain of the
estimates result from judgments that can be subjective and complex
and consequently actual results may differ from these estimates,
which would be reflected in future periods.
Material estimates
that are particularly susceptible to significant change in the
near-term relate to the determination of the reserve for losses and loss adjustment
expenses, which include amounts
estimated for claims incurred but not yet reported. The Company
uses various assumptions and actuarial data it believes to be
reasonable under the circumstances to make these estimates. In
addition, accounting policies specific to valuation of investments and assessment
of other-than-temporary impairment (“OTTI”)
involve
significant judgments and estimates material to the Company’s
consolidated financial statements. Although considerable
variability is likely to be inherent in these estimates, management
believes that any amounts provided are reasonable. These estimates
are continually reviewed and adjusted if necessary. Such
adjustments are reflected in current operations.
9
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
The
Company consolidates in these consolidated financial statements the
results of operations and financial position of all voting interest
entities (“VOE”) in which the Company has a controlling
financial interest and all variable interest entities
(“VIE”) in which the Company is considered to be the
primary beneficiary. The consolidation assessment, including the
determination as to whether an entity qualifies as a VIE or VOE,
depends on the facts and circumstances surrounding each
entity.
All
significant intercompany balances and transactions have been
eliminated.
2.
SIGNIFICANT
ACCOUNTING POLICIES
Cash and cash
equivalents: Cash and cash equivalents are comprised of cash
and short- term investments with original maturities of three
months or less.
Restricted
cash and cash equivalents: Restricted cash and cash equivalents represent
funds held in accordance with the Company’s trust agreements
with ceding insurers and trustees, which requires the Company to
maintain collateral with a market value greater than or equal to
the limit of liability, less unpaid premium.
Investments:
The Company from time to time invests in fixed-maturity securities
and equity securities, and for which its fixed-maturity securities
are classified as available-for-sale. The Company’s available
for sale investments are carried at fair value with changes in fair
value included as a separate component of accumulated other
comprehensive loss in shareholders’ equity. For the
Company’s investment in equity securities, the changes in
fair value are recorded within the consolidated statements of
operations.
Unrealized gains or
losses are determined by comparing the fair market value of the
securities with their cost or amortized cost. Realized gains and
losses on investments are recorded on the trade date and are
included in the consolidated statements of operations. The cost of
securities sold is based on the specified identification method.
Investment income is recognized as earned and discounts or premiums
arising from the purchase of debt securities are recognized in
investment income using the interest method over the remaining term
of the security.
The
Company reviews fixed-maturity securities, if any, for OTTI on a
quarterly basis and more frequently when economic or market
conditions warrant such review. When the fair value of any
investment is lower than its cost, an assessment is made to see
whether the decline is temporary or other-than-temporary. If the
decline is determined to be other-than-temporary the investment is
written down to fair value and an impairment charge is recognized
in operations in the period in which the Company makes such
determination. For a fixed-maturity security that the Company does
not intend to sell nor is it more likely than not that the Company
will be required to sell before recovery of its amortized cost,
only the credit loss component is recognized in operations, while
impairment related to all other factors is recognized in other
comprehensive income. The Company considers various factors in
determining whether an individual security is
other-than-temporarily impaired.
10
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
2.
SIGNIFICANT
ACCOUNTING POLICIES (continued)
Fair value
measurement: GAAP establishes a fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair
value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets (Level 1
measurements) and the lowest priority to unobservable inputs (Level
3 measurements). The three levels of the fair value hierarchy under
GAAP are as follows:
|
Level
1
|
Inputs
that reflect unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the ability to
access at the measurement date;
|
|
|
|
|
Level
2
|
Inputs
other than quoted prices that are observable for the asset or
liability either directly or indirectly, including inputs in
markets that are not considered to be active; and
|
|
|
|
|
Level
3
|
Inputs
that are unobservable.
|
Inputs
are used in applying the various valuation techniques and broadly
refer to the assumptions that market participants use to make
valuation decisions, including assumptions about risk. For fixed
maturity securities, inputs may include price information,
volatility statistics, specific and broad credit data, liquidity
statistics, broker quotes for similar securities and other factors.
The fair value of investments in stocks and exchange-traded funds
is based on the last traded price. A financial instrument’s
level within the fair value hierarchy is based on the lowest level
of any input that is significant to the fair value measurement.
However, the determination of what constitutes
“observable” requires significant judgment by the
Company’s investment custodians. The investment custodians
consider observable data to be market data which is readily
available, regularly distributed or updated, reliable and
verifiable, not proprietary, and provided by independent sources
that are actively involved in the relevant markets. The
categorization of a financial instrument within the hierarchy is
based upon the pricing transparency of the instrument.
Derivative
Financial Instruments: The
Company from time to time, may enter into underwriting contracts
such as industry loss warranty contracts (“ILW”) that
are treated as derivatives for GAAP purposes. GAAP requires that an
entity recognize all derivatives in the consolidated balance sheet
at fair value. It also requires that unrealized gains and losses
resulting from changes in fair value be included in operations or
comprehensive income (loss). The Company did not have any
derivative financial assets nor derivative financial liabilities at
September 30, 2020 or December 31, 2019.
Deferred policy
acquisition costs (“DAC”): Policy acquisition
costs consist of brokerage fees, federal excise taxes and other
costs related directly to the successful acquisition of new or
renewal insurance contracts and are deferred and amortized over the
terms of the reinsurance agreements to which they relate. The
Company evaluates the recoverability of DAC by determining if the
sum of future earned premiums and anticipated investment income is
greater than the expected future claims and expenses. If a loss is
probable on the unexpired portion of policies in force, a premium
deficiency loss is recognized. At September 30, 2020, the DAC was
considered fully recoverable and no premium deficiency loss was
recorded.
11
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
2.
SIGNIFICANT
ACCOUNTING POLICIES (continued)
Property and
equipment:
Property and equipment are recorded at cost when acquired. Property
and equipment are comprised of motor vehicles, furniture and
fixtures, computer equipment and leasehold improvements and are
depreciated and amortized, using the straight-line method, over
their estimated useful lives, which are five years for furniture
and fixtures and computer equipment and four years for motor
vehicles. Leasehold improvements are amortized over the lesser of
the estimated useful lives of the assets or remaining lease term.
The Company periodically reviews property and equipment that have
finite lives, and that are not held for sale, for impairment by
comparing the carrying value of the assets to their estimated
future undiscounted cash flows. For the three-month and nine-month
periods ended September 30, 2020 and 2019, there were no
impairments in property and equipment.
Allowance for
uncollectible receivables: Management evaluates credit
quality by evaluating the exposure to individual counterparties;
where warranted management also considers the credit rating or
financial position, operating results and/or payment history of the
counterparty. Management establishes an allowance for amounts for
which collection is considered doubtful. Adjustments to previous
assessments are recognized as income in the year in which they are
determined. At September 30, 2020, no receivables were determined
to be overdue or impaired and, accordingly, no allowance for
uncollectible receivables has been established.
Reserves for
losses and loss adjustment
expenses: The Company determines its reserves for losses and
loss adjustment expenses, if any, on the basis of the claims
reported by the Company’s ceding insurers and for losses
incurred but not reported (“IBNR”), management uses the
assistance of an independent actuary. The reserves for losses and
loss adjustment expenses represent management’s best estimate
of the ultimate settlement costs of all losses and loss adjustment
expenses. Management believes that the amounts are adequate;
however, the inherent impossibility of predicting future events
with precision, results in uncertainty as to the amount which will
ultimately be required for the settlement of losses and loss
expenses, and the differences could be material. Adjustments are
reflected in the consolidated statements of operations in the
period in which they are determined.
Loss experience
refund payable: Certain contracts may include retrospective
provisions that adjust premiums or result in profit commissions in
the event losses are minimal or zero. In accordance with GAAP, the
Company will recognize a liability in the period in which the
absence of loss experience obligates the Company to pay cash or
other consideration under the contracts. On the contrary, the
Company will derecognize such liability in the period in which a
loss experience arises. Such adjustments to the liability, which
accrue throughout the contract terms, will reduce the liability
should a catastrophic loss event covered by the Company
occur.
Premiums
assumed: The Company records premiums assumed, net of loss
experience refunds, as earned pro-rata over the terms of the
reinsurance agreements, or period of risk, where applicable, and
the unearned portion at the consolidated balance sheet date is
recorded as unearned premiums reserve. A reserve is made for
estimated premium deficiencies to the extent that estimated losses
and loss adjustment expenses exceed related unearned premiums.
Investment income is not considered in determining whether or not a
deficiency exists.
Subsequent
adjustments of premiums assumed, based on reports of actual premium
by the ceding companies, or revisions in estimates of ultimate
premium, are recorded in the period in which they are determined.
Such adjustments are generally determined after the associated risk
periods have expired, in which case the premium adjustments are
fully earned when assumed.
12
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
2.
SIGNIFICANT
ACCOUNTING POLICIES (continued)
Certain
contracts may allow for reinstatement premiums in the event of a
full limit loss prior to the expiration of the contract. A
reinstatement premium is not due until there is a full limit loss
event and therefore, in accordance with GAAP, the Company records a
reinstatement premium as written only in the event that the
reinsured incurs a full limit loss on the contract and the contract
allows for a reinstatement of coverage upon payment of an
additional premium. For catastrophe contracts which contractually
require the payment of a reinstatement premium equal to or greater
than the original premium upon the occurrence of a full limit loss,
the reinstatement premiums are earned over the original contract
period. Reinstatement premiums that are contractually calculated on
a pro-rata basis of the original premiums are earned over the
remaining coverage period.
Unearned Premiums
Ceded: The
Company reduces the risk of future losses on business assumed by
reinsuring certain risks and exposures with other reinsurers
(retrocessionaires). The Company remains liable to the extent that
any retrocessionaire fails to meet its obligations and to the
extent that the Company does not hold sufficient security for their
unpaid obligations.
Ceded
premiums are written during the period in which the risk incept and
are expensed over the contract period in proportion to the period
of protection. Unearned premiums ceded consist of the unexpired
portion of the reinsurance obtained.
Uncertain income
tax positions: The authoritative GAAP guidance on
accounting for, and disclosure of, uncertainty in income tax
positions requires the Company to determine whether an income tax
position of the Company is more likely than not to be sustained
upon examination by the relevant tax authority, including
resolution of any related appeals or litigation processes, based on
the technical merits of the position. For income tax positions
meeting the more likely than not threshold, the tax amount
recognized in the consolidated financial statements, if any, is
reduced by the largest benefit that has a greater than fifty
percent likelihood of being realized upon ultimate settlement with
the relevant taxing authority. The application of this
authoritative guidance has had no effect on the Company’s
consolidated financial statements because the Company had no
uncertain tax positions at September 30, 2020.
Loss Per
Share: Basic loss
per share has been computed on the basis of the weighted-average
number of ordinary shares outstanding during the periods presented.
Diluted loss per share is computed based on the weighted-average
number of ordinary shares outstanding and reflects the assumed
exercise or conversion of diluted securities, such as stock options
and warrants, computed using the treasury stock
method.
13
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
2.
SIGNIFICANT
ACCOUNTING POLICIES (continued)
Stock-Based Compensation:
The Company
accounts for stock-based compensation under the fair value
recognition provisions of GAAP which requires the measurement and
recognition of compensation for all stock-based awards made to
employees and directors, including stock options and restricted
stock issuances based on estimated fair values. The Company measures compensation for restricted
stock based on the price of the Company’s ordinary shares at
the grant date. Determining the fair value of stock options at the
grant date requires significant estimation and judgment. The
Company uses an option-pricing model (Black-Scholes option pricing
model) to assist in the calculation of fair value for stock
options. The Company's shares have not been publicly traded for a
sufficient length of time to solely use the Company's performance
to reasonably estimate the expected volatility. Therefore, when
estimating the expected volatility, the Company takes into
consideration the historical volatility of similar entities. The
Company considers factors such as an entity's industry, stage of
life cycle, size and financial leverage when selecting similar
entities. The Company may use a sample peer group of companies in
the reinsurance industry and/or the Company’s own historical
volatility in determining the expected volatility. Additionally,
the Company uses the full life of the options, ten years, as the
estimated term of the options, and has assumed no forfeitures
during the life of the options.
The Company uses the
straight-line attribution method for all grants that include only a
service condition. Compensation expense related to all awards is
included in general and administrative expenses.
Pending Accounting Updates:
Accounting
Standards Update ("ASU") No. 2016-13. In September
2016, the Financial Accounting Standards Board ("FASB") issued ASU
2016-13, “Financial Instruments - Credit Losses (Topic
326): Measurements of Credit Losses on Financial Instruments”
(“ASU 2016-13”). ASU 2016-13 amends the guidance
on reporting credits losses and affects loans, debt securities,
trade receivables, reinsurance recoverable and other financial
assets that have the contractual right to receive cash. The
amendments are effective for annual periods beginning after
December 15, 2022 (as amended), and interim periods within those
annual periods. The Company is in the process of evaluating the
impact of the requirements of ASU 2016-13 on the Company’s
consolidated financial statements.
Segment
Information: Under
GAAP, operating segments are based on the internal information that
management uses for allocating resources and assessing performance
as the source of the Company’s reportable segments. The
Company manages its business on the basis of one operating segment,
Property and Casualty Reinsurance, in accordance with the
qualitative and quantitative criteria established under
GAAP.
Reclassifications: Any reclassifications of prior period
amounts have been made to conform to the current period
presentation.
14
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
3.
CASH
AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH
EQUIVALENTS
|
|
At September 30,
|
At December 31,
|
|
|
2020
|
2019
|
|
|
(in thousands)
|
|
|
|
|
|
|
Cash
on deposit
|
$3,438
|
$3,456
|
|
Cash
held with custodians
|
2,248
|
2,506
|
|
Restricted
cash held in trust
|
1,693
|
2,054
|
|
|
|
|
|
Total
|
$7,379
|
$8,016
|
Cash
and cash equivalents are held by large and reputable counterparties
in the United States of America and in the Cayman Islands.
Restricted cash held in trust is custodied with Truist Bank and is
held in accordance with the Company’s trust agreements with
the ceding insurers and trustees, which require that the Company
provide collateral having a market value greater than or equal to
the limit of liability, less unpaid premium.
4.
INVESTMENTS
The
Company from time to time invests in fixed-maturity securities and
equity securities. At September 30, 2020 and December 31, 2019, the
Company did not hold any available-for-sale debt
securities.
Proceeds received, and the gross realized gains and losses from
sales of available-for-sale fixed-maturity securities, and equity
securities, for the three and nine months ended September 30, 2020
and nine months ended September 30, 2019 were as
follows:
|
|
Gross
proceeds
from
sales
|
Gross
Realized
Gains
|
Gross
Realized
Losses
|
|
|
($ in
thousands)
|
||
|
|
|
|
|
|
Three Months Ended September 30, 2020
|
|
|
|
|
Equity
securities
|
$294
|
$-
|
$(2)
|
|
|
|
|
|
|
Nine Months Ended September 30, 2020
|
|
|
|
|
Equity
securities
|
$2,429
|
$327
|
$(2)
|
|
|
|
|
|
|
Nine Months Ended September 30, 2019
|
|
|
|
|
Available-for-sale
fixed-maturity securities
|
$994
|
$3
|
$-
|
15
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
4.
INVESTMENTS
(continued)
Assets Measured at Estimated Fair Value on a Recurring
Basis
The following table presents information about the Company’s
financial assets measured at estimated fair value on a recurring
basis that is reflected in the consolidated balance sheets at
carrying value. The table indicates the fair value hierarchy of the
valuation techniques utilized by the Company to determine such fair
value as of September 30, 2020 and December 31, 2019:
|
|
Fair Value
Measurements Using
|
|
||
|
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
Total
|
|
As of September 30, 2020
|
($ in thousands)
|
|||
|
Financial
Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
$5,686
|
$-
|
$-
|
$5,686
|
|
|
|
|
|
|
|
Restricted cash and cash equivalents
|
$1,693
|
$-
|
$-
|
$1,693
|
|
|
|
|
|
|
|
Total
equity securities
|
$635
|
$-
|
$-
|
$635
|
|
|
|
|
|
|
|
Total
|
$8,014
|
$-
|
$-
|
$8,014
|
|
|
|
|
||
|
|
|
|
|
|
|
As of December 31, 2019
|
|
|||
|
Financial
Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
$5,962
|
$-
|
$-
|
$5,962
|
|
|
|
|
|
|
|
Restricted cash and cash equivalents
|
$2,054
|
$-
|
$-
|
$2,054
|
|
|
|
|
|
|
|
Total equity
securities
|
$692
|
$-
|
$-
|
$692
|
|
|
|
|
|
|
|
Total
|
$8,708
|
$-
|
$-
|
$8,708
|
There
were no transfers between Levels 1, 2 and 3 during the three and
nine months ended September 30, 2020 and 2019.
16
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
5.
TAXATION
Under
current Cayman Islands law, no corporate entity, including the
Company and the subsidiaries, is obligated to pay taxes in the
Cayman Islands on either income or capital gains. The Company and
its subsidiaries have an undertaking from the Governor-in-Cabinet
of the Cayman Islands, pursuant to the provisions of the Tax
Concessions Law, as amended, that, in the event that the Cayman
Islands enacts any legislation that imposes tax on profits, income,
gains or appreciations, or any tax in the nature of estate duty or
inheritance tax, such tax will not be applicable to the Company and
its subsidiaries or their operations, or to the ordinary shares or
related obligations, until April 23, 2033 and May 17, 2033,
respectively.
The
Company and its subsidiaries intend to conduct substantially all of
their operations in the Cayman Islands in a manner such that they
will not be engaged in a trade or business in the U.S. However,
because there is no definitive authority regarding activities that
constitute being engaged in a trade or business in the U.S. for
federal income tax purposes, the Company cannot assure that the
U.S. Internal Revenue Service will not contend, perhaps
successfully, that the Company or its subsidiary is engaged in a
trade or business in the U.S. A foreign corporation deemed to be so
engaged would be subject to U.S. federal income tax, as well as
branch profits tax, on its income that is treated as effectively
connected with the conduct of that trade or business unless the
corporation is entitled to relief under an applicable tax
treaty.
6.
VARIABLE INTEREST ENTITIES
Oxbridge Re NS. On December 22,
2017, the Company established Oxbridge Re NS, a Cayman domiciled
and licensed special purpose insurer, formed to provide additional
collateralized capacity to support Oxbridge Reinsurance
Limited’s reinsurance business. In respect of the debt issued
by Oxbridge Re NS to investors, Oxbridge Re NS has entered into
retrocession agreements with Oxbridge Reinsurance Limited on June
1, 2020 and June 1, 2019. Under these agreements, Oxbridge Re NS
receives a quota share of Oxbridge Reinsurance Limited’s
catastrophe business. Oxbridge Re NS is a non-rated insurer and the
risks have been fully collateralized by way of funds held in trust
for the benefit of Oxbridge Reinsurance Limited. Oxbridge Re NS is
able to provide investors with access to diversified natural
catastrophe risk backed by the distribution, underwriting, analysis
and research expertise of Oxbridge Re.
The
Company has determined that Oxbridge Re NS meets the definition of
a VIE as it does not have sufficient
equity capital to finance its activities. The Company
concluded that it is the primary beneficiary and has consolidated
the subsidiary upon its formation, as it owns 100% of the
voting shares, 100% of the issued share capital and has a
significant financial interest and the power to control the
activities of Oxbridge Re NS that most significantly impacts its
economic performance. The Company has no other obligation to
provide financial support to Oxbridge Re NS. Neither the creditors
nor beneficial interest holders of Oxbridge Re NS have recourse to
the Company’s general credit.
Upon
issuance of a series of participating notes by Oxbridge Re NS, all
of the proceeds from the issuance are deposited into collateral
accounts, to fund any potential obligation under the reinsurance
agreements entered into with Oxbridge Reinsurance Limited
underlying such series of notes. The outstanding principal amount
of each series of notes generally is expected to be returned to
holders of such notes upon the expiration of the risk period
underlying such notes, unless an event occurs which causes a loss
under the applicable series of notes, in which case the amount
returned is expected to be reduced by such noteholder's pro rata
share of such loss, as specified in the applicable governing
documents of such notes.
17
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
6. VARIABLE INTEREST ENTITIES
(continued)
In addition, holders of such notes are generally entitled to
interest payments, payable annually, as determined by the
applicable governing documents of each series of notes. Oxbridge Re
Holdings Limited receives an origination and structuring fee in
connection with the formation, operation and management of Oxbridge
Re NS.
Notes Payable to Series 2020-1 noteholders
Oxbridge Re NS entered into a retrocession agreement with Oxbridge
Reinsurance Ltd on June 1, 2020 and issued $216
thousand of participating notes which provides quota share
support for Oxbridge Re’s global property catastrophe excess
of loss reinsurance business. The participating notes have been
assigned Series 2020-1 and are due to mature on June 1, 2023. None
of the participating notes were redeemed during the period ending
September 30, 2020.
The
income from Oxbridge Re NS operations that are attributable to the
participating notes noteholders for the three and nine month ended
September 30, 2020 was $26,000 and $34,000 respectively and are
included within accounts payable and other liabilities as at
September 30, 2020.
Notes Payable to Series 2019-1 noteholders
Oxbridge Re NS entered into a retrocession agreement with Oxbridge
Reinsurance Ltd on June 1, 2019 and issued $600
thousand of participating notes which provides quota share
support for Oxbridge Re’s global property catastrophe excess
of loss reinsurance business. The participating notes were assigned
Series 2019-1 and were due to mature on June 1, 2022. However, the
participating notes were all redeemed during the period ending June
30, 2020.
The
income from Oxbridge Re NS operations that were attributable to the
participating notes noteholders for the three months ended
September 30, 2019 was $70,000. The income from Oxbridge Re NS
operations that were attributable to the participating notes
noteholders for the nine months ended September 30, 2020 and
September 30, 2019 was $78,000 and $94,000 respectively. The income
attributable to the participating notes noteholders for the three
and nine-month periods ended September 30, 2019 were included
within accounts payable and other liabilities as at September 30,
2019.
18
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
7.
RESERVE FOR LOSSES AND LOSS ADJUSTMENT EXPENSES
The
following table summarizes the Company’s loss and loss
adjustment expenses (“LAE”) and the reserve for loss
and LAE reserve movements for the three and nine-month periods
ending September 30, 2020 and 2019:
|
|
Three Months Ended
|
Nine Months Ended
|
||
|
|
September 30,
|
September 30,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
|
($ in thousands)
|
($ in thousands)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
beginning of period
|
$-
|
107
|
$-
|
4,108
|
|
Incurred
related to:
|
|
|
|
|
|
Current
period
|
-
|
-
|
-
|
-
|
|
Prior
period
|
-
|
-
|
-
|
-
|
|
Total
incurred
|
-
|
-
|
-
|
-
|
|
Paid
related to:
|
|
|
|
|
|
Current
period
|
-
|
-
|
-
|
-
|
|
Prior
period
|
-
|
-
|
-
|
(4,001)
|
|
Total
paid
|
-
|
-
|
-
|
(4,001)
|
|
Balance,
end of period
|
$-
|
107
|
$-
|
107
|
The
reserves for losses and LAE are comprised of case reserves (which
are based on claims that have been reported) and IBNR reserves
(which are based on losses that are believed to have occurred but
for which claims have not yet been reported and include a provision
for expected future development on existing case reserves). The
Company uses the assistance of an independent actuary in the
determination of IBNR and expected future development of existing
case reserves.
The
uncertainties inherent in the reserving process and potential
delays by cedants and brokers in the reporting of loss information,
together with the potential for unforeseen adverse developments,
may result in the reserve for losses and LAE ultimately being
significantly greater or less than the reserve provided at the end
of any given reporting period. The degree of uncertainty is further
increased when a significant loss event takes place near the end of
a reporting period. Reserve for losses and LAE estimates are
reviewed periodically on a contract by contract basis and updated
as new information becomes known. Any resulting adjustments are
reflected in income in the period in which they become
known.
The
Company’s reserving process is highly dependent on the timing
of loss information received from its cedants and related
brokers.
19
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
8.
LOSS PER SHARE
A summary of the numerator and denominator of the basic and diluted
loss per share is presented below (dollars in thousands except per
share amounts):
|
|
Three Months Ended
|
Nine Months Ended
|
||
|
|
September 30,
|
September 30,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
Net
loss
|
$(33)
|
(15)
|
$(232)
|
(366)
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
Weighted
average shares - basic
|
5,733,587
|
5,733,587
|
5,733,587
|
5,733,587
|
|
Effect
of dilutive securities - Stock options
|
-
|
-
|
-
|
-
|
|
Shares
issuable upon conversion of warrants
|
-
|
-
|
-
|
-
|
|
Weighted
average shares - diluted
|
5,733,587
|
5,733,587
|
5,733,587
|
5,733,587
|
|
Loss
per share - basic
|
$(0.01)
|
(0.00)
|
$(0.04)
|
(0.06)
|
|
Loss
per share - diluted
|
$(0.01)
|
(0.00)
|
$(0.04)
|
(0.06)
|
For the three and nine-month periods ended September 30, 2020 and
2019, options to purchase 540,000 ordinary shares were
anti-dilutive due to net loss during the periods
presented.
For the three and nine-month periods ended September 30, 2020 and
2019, 8,230,700 warrants to purchase an aggregate of 8,230,700
ordinary shares were anti-dilutive due to net loss during the
periods presented.
GAAP requires the Company to use the two-class method in computing
basic loss per share since holders of the Company’s
restricted stock have the right to share in dividends, if declared,
equally with common stockholders. These participating securities
effect the computation of both basic and diluted loss per share
during periods of net loss.
20
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
9.
SHAREHOLDERS’
EQUITY
On
February 28, 2014, the Company’s Registration Statement on
Form S-1, as amended, relating to the initial public offering of
the Company’s units was declared effective by the SEC. The
Registration Statement covered the offer and sale by the Company of
4,884,650 units, each consisting of one ordinary share and one
warrant (“Unit”), which were sold to the public on
March 26, 2014 at a price of $6.00 per Unit. The ordinary shares
and warrants comprising the Units began separate trading on May 9,
2014. The ordinary shares and warrants are traded on the Nasdaq
Capital Market under the symbols “OXBR” and
“OXBRW,” respectively. One warrant may be exercised to
acquire one ordinary share at an exercise price equal to $7.50 per
share on or before March 26, 2024, as amended. At any time after
September 26, 2014 and before the expiration of the warrants, the
Company at its option may cancel the warrants in whole or in part,
provided that the closing price per ordinary share has exceeded
$9.38 for at least ten trading days within any period of twenty
consecutive trading days, including the last trading day of the
period.
The
initial public offering resulted in aggregate gross proceeds to the
Company of approximately $29.3 million (of which approximately $5
million related to the fair value proceeds on the warrants issued)
and net proceeds of approximately $26.9 million after deducting
underwriting commissions and offering expenses.
There
were 8,230,700 warrants outstanding at September 30, 2020 and 2019.
No warrants were exercised during the three and nine-month periods
ended September 30, 2020 and 2019.
As of
September 30, 2020, none of the Company’s retained earnings
were restricted from payment of dividends to the company’s
shareholders. However, since most of the Company’s capital
and retained earnings may be invested in its subsidiaries, a
dividend from the subsidiaries would likely be required in order to
fund a dividend to the Company’s shareholders and would
require notification to the Cayman Islands Monetary Authority
(“CIMA”).
Under
Cayman Islands law, the use of additional paid-in capital is
restricted, and the Company will not be allowed to pay dividends
out of additional paid-in capital if such payments result in
breaches of the prescribed and minimum capital
requirement.
21
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
10.
SHARE-BASED COMPENSATION
The Company currently
has outstanding stock-based awards granted under the 2014 Omnibus
Incentive Plan (the “Plan”). Under the Plan, the Company has discretion to
grant equity and cash incentive awards to eligible individuals,
including the issuance of up to 1,000,000 of the Company’s
ordinary shares. At September 30, 2020,
there were 400,000 shares available for grant under the
Plan.
Stock options
Stock options granted and outstanding under the Plan vests
quarterly over four years and are exercisable over the contractual
term of ten years.
A summary of the stock option activity for the three and nine-month
periods ended September 30, 2020 and 2019 is as
follows:
|
|
Number
of
Options
|
Weighted Average
Exercise
Price
|
Weighted Average Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
|
Outstanding
at January 1, 2020
|
540,000
|
$3.86
|
|
|
|
Outstanding
at March 31, 2020
|
540,000
|
$3.86
|
7.1
years
|
$-
|
|
Outstanding
at June 30, 2020
|
540,000
|
$3.86
|
6.9
years
|
$-
|
|
Outstanding
at September 30, 2020
|
540,000
|
$3.86
|
6.6
years
|
$-
|
|
Exercisable
at September 30, 2020
|
374,688
|
$4.65
|
5.9
years
|
$-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
at January 1, 2019
|
250,000
|
$6.01
|
|
|
|
Granted
|
290,000
|
$2.00
|
|
|
|
Outstanding
at March 31, 2019
|
540,000
|
$3.86
|
8.1
years
|
$-
|
|
Outstanding
at June 30, 2019
|
540,000
|
$3.86
|
7.9
years
|
$-
|
|
Outstanding
at September 30, 2019
|
540,000
|
$3.86
|
7.6
years
|
$-
|
|
Exercisable
at September 30, 2019
|
291,250
|
$5.26
|
6.3
years
|
$-
|
Compensation expense
recognized for the three-month periods ended September 30, 2020 and
2019 totaled $8,000 and $9,000 respectively and for the nine-month
periods ended September 30, 2020 and 2019, totaled $24,000 and
$27,000 respectively. Compensation expense is included in general
and administrative expenses. At September 30, 2020 and 2019, there
was approximately $62,000 and $95,000, respectively, of total
unrecognized compensation expense related to non-vested stock
options granted under the Plan. The Company expects to recognize the remaining
compensation expense over a weighted-average period of twenty-four
(24) months.
22
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
10.
SHARE-BASED COMPENSATION (continued)
No
options were granted during the three and nine-month period ended
September 30, 2020. During the nine-month period ended September
30, 2019 the Company granted 290,000 options with fair value
estimated on the date of grant using the following assumptions and
the Black-Scholes option pricing model:
|
|
2019
|
|
|
|
|
Expected
dividend yield
|
0%
|
|
Expected
volatility
|
31%
|
|
Risk-free
interest rate
|
2.59%
|
|
Expected
life (in years)
|
10
|
|
Per
share grant date fair value of options issued
|
$0.36
|
At the
time of the grant, the dividend yield was based on the
Company’s history and expectation of dividend payouts at the
time of the grant; expected volatility was based on volatility of
similar companies’ common stock; the risk-free rate was based
on the U.S. Treasury yield curve in effect and the expected life
was based on the contractual life of the options.
Restricted Stock Awards
The
Company may grant restricted stock awards to eligible individuals
in connection with their service to the Company. The terms of the
Company’s outstanding restricted stock grants may include
service, performance and market-based conditions. The fair value of
any awards with market-based conditions is determined using a Monte
Carlo simulation method, which calculates many potential outcomes
for an award and then establishes fair value based on the most
likely outcome. The determination of fair value with respect to the
awards with only performance or service-based conditions is based
on the value of the Company’s stock on the grant
date.
During
the three and nine-month periods ended September 30, 2020 and 2019,
the Company did not grant any restricted stock. At September 30,
2020, there were no unvested restricted stock.
23
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
11.
NET WORTH FOR REGULATORY PURPOSES
The
subsidiaries are subject to a minimum and prescribed capital
requirement as established by CIMA. Under the terms of their
respective licenses, Oxbridge Reinsurance Limited and Oxbridge Re
NS are required to maintain a minimum and prescribed capital
requirement of $500 in accordance with the relevant
subsidiary’s approved business plan filed with
CIMA.
At
September 30, 2020, the Oxbridge Reinsurance Limited’s net
worth of $914 thousand exceeded the minimum and prescribed capital
requirement. For the three and nine-month periods ended September
30, 2020, the Subsidiary’s net loss was approximately $111
thousand and $519 thousand respectively.
At
September 30, 2020, the Oxbridge Re NS’ net worth of $144
thousand exceeded the minimum and prescribed capital requirement.
For the three and nine-month periods ended September 30, 2020, the
Subsidiary’s net income was approximately $8 thousand and $39
thousand respectively.
The
Subsidiaries are not required to prepare separate statutory
financial statements for filing with CIMA, and there were no
material differences between the Subsidiaries' GAAP capital,
surplus and net income, and its statutory capital, surplus and net
income as of September 30, 2020 or for the period then
ended.
12.
FAIR
VALUE AND CERTAIN RISKS AND UNCERTAINTIES
Fair values
With
the exception of balances in respect of insurance contracts (which
are specifically excluded from fair value disclosures under GAAP)
and investment securities as disclosed in Note 4 of these
consolidated financial statements, the carrying amounts of all
other financial instruments, which consist of cash and cash
equivalents, restricted cash and cash equivalents, accrued interest
and dividends receivable, premiums receivable and other assets,
notes payable and accounts payable and other liabilities,
approximate their fair values due to their short-term
nature.
Concentration of underwriting risk
A
substantial portion of the Company’s current reinsurance
business ultimately relates to the risks of a limited number of
entities; accordingly, the Company’s underwriting risks are
not significantly diversified.
Concentrations of Credit and Counterparty Risk
The
Company markets retrocessional and reinsurance policies worldwide
through its brokers. Credit risk exists to the extent that
any of these brokers may be unable to fulfill their contractual
obligations to the Company. For example, the Company is
required to pay amounts owed on claims under policies to brokers,
and these brokers, in the Company. In some jurisdictions, if a
broker fails to make such a payment, the Company might remain
liable to the ceding company for the deficiency. In addition, in
certain jurisdictions, when the ceding company pays premiums for
these policies to brokers, these premiums are considered to have
been paid and the ceding insurer is no longer liable to the Company
for those amounts, whether or not the premiums have actually been
received.
24
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
12. FAIR
VALUE AND CERTAIN RISKS AND UNCERTAINTIES (cont’d)
The
Company remains liable for losses it incurs to the extent that any
third-party reinsurer is unable or unwilling to make timely
payments under reinsurance agreements. The Company would also
be liable in the event that its ceding companies were unable to
collect amounts due from underlying third-party
reinsurers.
The
Company mitigates its concentrations of credit and counterparty
risk by using reputable and several counterparties which decreases
the likelihood of any significant concentration of credit risk with
any one counterparty.
Market risk
Market
risk exists to the extent that the values of the Company’s
monetary assets fluctuate as a result of changes in market prices.
Changes in market prices can arise from factors specific to
individual securities or their respective issuers, or factors
affecting all securities traded in a particular market. Relevant
factors for the Company are both volatility and liquidity of
specific securities and markets in which the Company holds
investments. The Company has established investment guidelines that
seek to mitigate significant exposure to market risk.
25
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
|
13. LEASES
|
Operating lease
right-of-use assets and operating lease liabilities are disclosed
as line in the consolidated balance sheet. We determine if a
contract contains a lease at inception and recognize operating
lease right-of-use assets and operating lease liabilities based on
the present value of the future minimum lease payments at the
commencement date. As our leases do not provide an implicit rate,
we use our incremental borrowing rate based on the information
available at the commencement date in determining the present value
of future payments. Lease agreements that have lease and non-lease
components, are accounted for as a single lease component. Lease
expense is recognized on a straight-line basis over the lease
term.
The
Company has two operating lease obligations namely for the
Company’s office facilities located at Suite 201, 42 Edward
Street Grand Cayman, Cayman Islands and residential space at
Turnberry Villas in Grand Cayman, Cayman Islands. The office lease
has a remaining lease term of approximately 41 months and includes
an option to extend the lease. Under the terms of the lease, the
Company also has the right to terminate the lease after thirty-six
(36) months upon giving appropriate notice in writing to the
Lessor. The residential lease has a remaining lease term of
approximately 27 months.
The
components of lease expense and other lease information as of and
during the three and nine-month period ended September 30, 2020 and
2019 are as follows:
|
|
For the Nine-Month Period
|
For the Nine-Month Period
|
|
(in thousands)
|
Ended September 30, 2020
|
Ended September 30, 2019
|
|
Operating Lease Cost (1)
|
$70
|
$63
|
|
|
|
|
|
Cash
paid for amounts included in the measurement of lease
liabilities
|
|
|
|
Operating
cash flows from operating leases
|
$72
|
$71
|
|
|
|
|
|
(1)
Includes short-term
leases
|
|
|
|
(in thousands)
|
At September 30, 2020
|
At September 30, 2019
|
|
Operating
lease right-of-use assets
|
$242
|
$146
|
|
|
|
|
|
Operating
lease liabilities
|
$243
|
$146
|
|
|
|
|
|
Weighted-average
remaining lease term - operating leases
|
2.80
years
|
4.67
years
|
|
|
|
|
|
Weighted-average
discount rate - operating leases
|
5.25%
|
6.5%
|
26
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (unaudited)
September
30, 2020
13. LEASES (continued)
Future
minimum lease payments under non-cancellable leases as of September
30, 2020, reconciled to our discounted operating lease liability
presented on the consolidated balance sheet are as
follows:
|
(in thousands)
|
At September 30, 2020
|
At December 31, 2019
|
|
Remainder
of 2020
|
$24
|
$36
|
|
2021
|
96
|
36
|
|
2022
|
97
|
37
|
|
2023
|
40
|
37
|
|
Thereafter
|
6
|
6
|
|
Total
future minimum lease payments
|
$263
|
$152
|
|
|
|
|
|
Less
imputed interest
|
(20)
|
(19)
|
|
Total
operating lease liability
|
$243
|
133
|
14.
RELATED
PARTY TRANSACTIONS
During
the nine-month period ending September 30, 2020, Mr. Jay Madhu, a
director and officer of the Company and its subsidiaries invested
$68 thousand in Series 2020-1 participating notes and is included
within notes payable in the consolidated balance
sheet.
During
the three and nine-month periods ending September 30, 2019, Mr. Jay
Madhu, a director and officer of the Company and its subsidiaries
invested $50 thousand in Series 2019-1 participating notes, which
were subsequently redeemed in June 2020.
15.
SUBSEQUENT
EVENTS
We
evaluate all subsequent events and transactions for potential
recognition or disclosure in our consolidated financial statements.
There were no other events subsequent to September 30, 2020 for
which disclosure was required.
27
Item
2. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
Certain
statements in this Quarterly Report on Form 10-Q, including in this
Management’s Discussion and Analysis, other than purely
historical information, including estimates, projections,
statements relating to our business plans, objectives and expected
operating results, and the assumptions upon which those statements
are based, are “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”). These forward-looking statements generally are
identified by the words “believe,”
“project,” “predict,” “expect,”
“anticipate,” “estimate,”
“intend,” “plan,” “may,”
“should,” “will,” “would,”
“will be,” “will continue,” “will
likely result,” and similar expressions. Forward-looking
statements are based on current expectations and assumptions that
are subject to risks and uncertainties which may cause actual
results to differ materially from the forward-looking statements. 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 with
the Securities and Exchange Commission (“SEC”) on
March 23, 2020. We undertake no obligation to publicly
update or revise any forward -looking statements, whether as a
result of new information, future events, or otherwise. Readers are
cautioned not to place undue reliance on the forward -looking
statements which speak only to the dates on which they were
made.
GENERAL
The
following is a discussion and analysis of our results of operations
for the three and nine-month periods ended September 30, 2020 and
2019 and our financial condition as of September 30, 2020 and
December 31, 2019. The following discussion should be read in
conjunction with our consolidated financial statements and related
notes included elsewhere in this Quarterly Report on Form 10-Q and
in our Form
10-K filed with the Securities and Exchange Commission
(“SEC”) on March 23, 2020. References to
“we,” “us,” “our,” “our
company,” or “the Company” refer to Oxbridge Re
Holdings Limited and its wholly-owned subsidiaries, Oxbridge
Reinsurance Limited and Oxbridge Re NS, unless the context dictates
otherwise.
Overview
We are
a Cayman Islands specialty property and casualty reinsurer that
provides reinsurance solutions through our reinsurance
subsidiaries, Oxbridge Reinsurance Limited and Oxbridge Re NS.
Oxbridge Re NS functions as a reinsurance sidecar which increases
the underwriting capacity of Oxbridge Reinsurance Limited. Oxbridge
Re NS issues participating notes to third party investors, the
proceeds of which are utilized to collateralize Oxbridge
Reinsurance Limited’s reinsurance obligations. We focus on
underwriting fully-collateralized reinsurance contracts primarily
for property and casualty insurance companies in the Gulf Coast
region of the United States, with an emphasis on Florida. We
specialize in underwriting medium frequency, high severity risks,
where we believe sufficient data exists to analyze effectively the
risk/return profile of reinsurance contracts.
We
underwrite reinsurance contracts on a selective and opportunistic
basis as opportunities arise based on our goal of achieving
favorable long-term returns on equity for our shareholders. Our
goal is to achieve long-term growth in book value per share by
writing business that generates attractive underwriting profits
relative to the risk we bear. Unlike other insurance and
reinsurance companies, we do not intend to pursue an aggressive
investment strategy and instead will focus our business on
underwriting profits rather than investment profits. However, we
intend to complement our underwriting profits with investment
profits on an opportunistic basis. Our primary business focus is on
fully collateralized reinsurance contracts for property
catastrophes, primarily in the Gulf Coast region of the United
States, with an emphasis on Florida. Within that market and risk
category, we attempt to select the most economically attractive
opportunities across a variety of property and casualty insurers.
As our capital base grows, however, we expect that we will consider
further growth opportunities in other geographic areas and risk
categories.
28
Our
level of profitability is primarily determined by how adequately
our premiums assumed and investment income cover our costs and
expenses, which consist primarily of acquisition costs and other
underwriting expenses, claim payments and general and
administrative expenses. One factor leading to variation in our
operational results is the timing and magnitude of any follow-on
offerings we undertake (if any), as we are able to deploy new
capital to collateralize new reinsurance treaties and consequently,
earn additional premium revenue. In addition, our results of
operations may be seasonal in that hurricanes and other tropical
storms typically occur during the period from June 1 through
November 30. Further, our results of operations may be subject to
significant variations due to factors affecting the property and
casualty insurance industry in general, which include competition,
legislation, regulation, general economic conditions, judicial
trends, and fluctuations in interest rates and other changes in the
investment environment.
Because
we employ an opportunistic underwriting and investment philosophy,
period-to-period comparisons of our underwriting results may not be
meaningful. In addition, our historical investment results may not
necessarily be indicative of future performance. Due to the nature
of our reinsurance and investment strategies, our operating results
will likely fluctuate from period to period.
Business outlook
The
novel coronavirus ("COVID-19") pandemic has had and is expected to
continue to have a significant effect on the reinsurance industry.
The industry is currently being impacted by a number of factors
including: uncertainties with respect to current and future losses,
reduction in interest rates, equity market volatility and ongoing
business and financial market impacts of an economic downturn. The
insurance industry is likely to experience material losses
resulting from COVID-19, which will reduce available capital
and we expect will help to sustain the upward pricing trend for
reinsurers that we were seeing across many lines of business
before COVID-19. However, the ultimate impact on current
business in force as well as risks and potential opportunities on
future business remains highly uncertain.
Impact of COVID-19 on Business Operations
We
reacted quickly and decisively to the COVID-19 crisis when we
became aware of the potential impact on our business operations. We
have continued to monitor and adjust our operations as the global
pandemic unfolds. As local directives required us to transition our
operations to remote working arrangements, all functions remained
fully operational with all employees having remote access to the
Company's network and IT systems. Each employee was equipped with a
computer and related equipment at their home to ensure access to
our network and efficiency. Prior to the COVID-19 crisis we
had general remote, work-from-home capabilities and had previously
tested those systems. We have experienced no material disruption in
our business operations. As of September 30, 2020, our operations
are back to normal. However, should the situation change for the
worse, we will revert to working remotely.
29
PRINCIPAL REVENUE AND EXPENSE ITEMS
Revenues
We
derive our most significant revenues from two principal
sources:
● premiums
assumed from reinsurance on property and casualty business;
and
● income
from investments, including Industry Loss Warranties
Premiums assumed
include all premiums received by a reinsurance company during a
specified accounting period, even if the policy provides coverage
beyond the end of the period. Premiums are earned over the term of
the related policies. At the end of each accounting period, the
portion of the premiums that are not yet earned are included in the
unearned premiums reserve and are realized as revenue in subsequent
periods over the remaining term of the policy. Our policies
typically have a term of twelve months. Thus, for example, for a
policy that is written on July 1, 2020, typically one-half of the
premiums will be earned in 2020 and the other half will be earned
during 2021. However, in the event of limit losses on our policies,
premium recognition will be accelerated to match losses incurred in
the period, when there is no possibility of any future treaty-year
losses under the contracts.
Premiums from
reinsurance on property and casualty business assumed are directly
related to the number, type and pricing of contracts we
write.
Premiums assumed
are recorded net of change in loss experience refund, which
consists of changes in amounts due to the cedants under one of our
reinsurance contracts. These contracts contain retrospective
provisions that adjust premiums in the event losses are minimal or
zero. We recognize a liability pro-rata over the period in which
the absence of loss experience obligates us to refund premiums
under the contracts, and we will derecognize such liability in the
period in which a loss experience arises. The change in loss
experience refund is negatively correlated to loss and loss
adjustment expenses described below.
Income
from our investments is primarily comprised of interest income,
dividends and net realized and unrealized gains (losses) on
investment securities. Such income is primarily from the
Company’s investments, which includes investments held in
trust accounts that collateralize the reinsurance policies that we
write. The investment parameters for trust accounts are generally
be established by the cedant for the relevant policy.
Industry Loss
Warranties
The
Company may buy and sell industry loss warranties as a way to
access certain risks. An industry loss warranty is a financial
instrument designed to protect insurers or reinsurers from severe
losses due to natural and man-made catastrophes and can take the
form of either an insurance contract or a swap agreement. Under
both forms, a premium is paid at the inception of the contract and,
in return, a payout is made if a catastrophic event causes loss to
the insurance industry in excess of a predetermined trigger
amount.
Industry loss
warranties may also be triggered by other parametric measurements
defined in the contract such as observed wind speeds, measured
seismic activity or other factors. Industry loss warranties in the
form of an insurance contract (also referred to as the "indemnity
form") are typically dual-trigger instruments and, in addition to
requiring a loss to the industry, require that the buyer of the
protection actually suffer a loss from the triggering event. The
Company may buy and sell industry loss warranties in the form of an
insurance contract or in the form of a derivative
contract.
30
Expenses
Our
expenses consist primarily of the following:
● losses
and loss adjustment expenses;
● policy
acquisition costs and underwriting expenses; and
● general
and administrative expenses.
Loss
and loss adjustment expenses are a function of the amount and type
of reinsurance contracts we write and of the loss experience of the
underlying coverage. As described below, loss and loss adjustment
expenses are based on the claims reported by our Company’s
ceding insurers, and may include an actuarial analysis of the
estimated losses, including losses incurred during the period and
changes in estimates from prior periods. Depending on the nature of
the contract, loss and loss adjustment expenses may be paid over a
period of years.
Policy
acquisition costs and underwriting expenses consist primarily of
brokerage fees, ceding commissions, premium taxes and other direct
expenses that relate to our writing of reinsurance contracts. We
amortize deferred acquisition costs over the related contract
term.
General
and administrative expenses consist of salaries and benefits and
related costs, including costs associated with our professional
fees, rent and other general operating expenses consistent with
operating as a public company.
31
RESULTS OF OPERATIONS
The following is our consolidated statement of operations and
performance ratios for the three and nine-month periods ended
September 30, 2020 and 2019 (dollars in thousands, except per share
amounts):
|
|
Three Months Ended
|
Nine Months Ended
|
||
|
|
September 30,
|
September 30,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
|
(unaudited)
|
(unaudited)
|
||
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Assumed
premiums
|
$-
|
-
|
864
|
1,116
|
|
Change
in unearned premiums reserve
|
247
|
279
|
(218)
|
(744)
|
|
|
|
|
|
|
|
Net
premiums earned
|
247
|
279
|
646
|
372
|
|
Net
investment and other income
|
32
|
54
|
90
|
182
|
|
Net
realized investment (losses)/gains
|
(2)
|
-
|
325
|
3
|
|
Change
in fair value of equity securities
|
(18)
|
17
|
(343)
|
20
|
|
|
|
|
|
|
|
Total
revenue
|
259
|
350
|
718
|
577
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
Policy
acquisition costs and underwriting expenses
|
27
|
31
|
71
|
41
|
|
General
and administrative expenses
|
239
|
264
|
767
|
808
|
|
|
|
|
|
|
|
Total
expenses
|
266
|
295
|
838
|
849
|
|
|
|
|
|
|
|
(Loss)
Income before income attributable to noteholders
|
$(7)
|
55
|
(120)
|
(272)
|
|
|
|
|
|
|
|
Income
attributable to noteholders
|
(26)
|
(70)
|
(112)
|
(94)
|
|
|
|
|
|
|
|
Net
loss
|
$(33)
|
(15)
|
(232)
|
(366)
|
|
|
|
|
|
|
|
Loss per share
|
|
|
|
|
|
Basic
and Diluted
|
$(0.01)
|
(0.00)
|
(0.04)
|
(0.06)
|
|
|
|
|
|
|
|
Dividends paid per share
|
$-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
ratios to net premiums earned:
|
|
|
|
|
|
Loss
ratio
|
0.0%
|
0.0%
|
0.0%
|
0.0%
|
|
Acquisition
cost ratio
|
10.9%
|
11.1%
|
11.0%
|
11.0%
|
|
Expense
ratio
|
107.7%
|
105.7%
|
129.7%
|
228.2%
|
|
Combined
ratio
|
107.7%
|
105.7%
|
129.7%
|
228.2%
|
32
General. Net loss
for the quarter ended September 30, 2020 was $33 thousand, or
($0.01) per basic and diluted share, compared to a net loss of $15
thousand, or ($0.00) per basic and diluted share, for the quarter
ended September 30, 2019. The increase in net loss is due primarily
to unrealized losses on investments recorded during the three
months period ending September 30, 2020.
Net loss for
the nine months ended September 30, 2020 was $232 thousand, or
($0.04) per basic and diluted share, compared to a net loss of $366
thousand, or ($0.06) per basic and diluted share, for the nine
months ended September 30, 2019. The decrease in net loss is due
primarily to higher net premiums earned during the nine months
period ending September 30, 2020.
Premium
Income. Net premiums
earned typically reflects the pro rata inclusion into income of
premiums assumed (net of loss experience refund) over the life of
the reinsurance contracts.
Net
premiums earned for the quarter ended September 30, 2020 decreased
$32 thousand, to $247 thousand from $279 thousand for the quarter
ended September 30, 2019. The decrease is wholly due to the fact
that lower capital was deployed in the current period, when
compared to the same period in 2019.
Net
premiums earned for the nine months ended September 30, 2020
increased $274 thousand, to $646 thousand from $372 thousand for
the nine months ended September 30, 2019. The increase is due to
only one month premium recognized during the previous period as a
result of previous accelerated premium recognition, when compared
to the normal recognition of premium during current
period.
Losses
Incurred. There
were no losses incurred during the three and nine-month
periods ending September 30, 2020 and 2019.
Policy Acquisition Costs
and Underwriting Expenses. Acquisition
costs represent the amortization of the brokerage fees and federal
excise taxes incurred on reinsurance contracts placed. Policy acquisition costs and underwriting expenses
for the quarter ended September 30, 2020 decreased $4 thousand to
$27 thousand from $31 thousand for the quarter ended September 30,
2019. The decrease is due to the decrease in net premiums
earned during the current quarter, when compared with same period
prior year.
Policy
acquisition costs and underwriting expenses for the nine-month
period ended September 30, 2020 increased $30 thousand to $71
thousand from $41 thousand for the nine-month period ended
September 30, 2019. The increase is wholly due to the normal
recognition of policy acquisition costs during the current period,
when compared with lower recognition in the prior year period due
to the previous acceleration of such costs upon suffering limit
losses on reinsurance contracts.
General and Administrative
Expenses. General and administrative expenses for the
quarter ended September 30, 2020 decreased $25 thousand, to $239
thousand, from $264 thousand for the quarter ended September 30,
2019. The decrease is due to cost savings initiatives implemented
by the Company.
General
and administrative expenses for the nine-month period ended
September 30, 2020 decreased $41 thousand, to $767 thousand, from
$808 thousand for the nine-month period ended September 30, 2019.
The decrease is due to general cost savings initiatives implemented
by the Company.
33
MEASUREMENT OF RESULTS
We use
various measures to analyze the growth and profitability of
business operations. For our reinsurance business, we measure
growth in terms of premiums assumed and we measure underwriting
profitability by examining our loss, underwriting expense and
combined ratios. We analyze and measure profitability in terms of
net income and return on average equity.
Premiums Assumed. We
use gross premiums assumed to measure our sales of reinsurance
products. Gross premiums assumed also correlates to our ability to
generate net premiums earned.
Loss Ratio. The loss
ratio is the ratio of losses and loss adjustment expenses incurred
to premiums earned and measures
the underwriting profitability of our reinsurance business. The
loss ratio for the three and nine-month periods ended September 30,
2020 and September 30, 2019 was 0%. This is due to no loss and loss
adjustment expenses incurred in the periods ended September 30,
2020 and September 30, 2019.
Acquisition Cost
Ratio. The acquisition cost ratio is the ratio of policy
acquisition costs and other underwriting
expenses to net premiums earned. The acquisition cost ratio
measures our operational efficiency in producing, underwriting and
administering our reinsurance business. The acquisition cost ratio
decreased from 11.1% for the quarter ended September 30, 2019 to
10.9% for the quarter ended September 30, 2020. The decrease is due
to marginally lower weighted-average acquisition costs on
reinsurance contracts in force during the three-month period ended
September 30, 2020 compared with the three-month period ended
September 30, 2019.
The
acquisition cost ratio remained unchanged at 11.0% for the
nine-month period ended September 30, 2020 and 2019.
Expense Ratio. The
expense ratio is the ratio of policy acquisition costs, other
underwriting expenses and other
administrative expenses to net premiums earned. We use the expense
ratio to measure our operating performance. The expense ratio
increased from 105.7% for the three-month period ended September
30, 2019 to 107.7% for the three-month period ended September 30,
2020. The increase is due primarily to a lower denominator in net
premiums earned as recorded during the three-month period ended
September 30, 2020, when compared with the three-month period ended
September 30, 2019.
The
expense ratio decreased from 228.2% for the nine-month period ended
September 30, 2019 to 129.7% for the nine-month period ended
September 30, 2020. The decrease is due primarily to reduced
general and administrative expenses coupled with a higher
denominator in net premiums earned as recorded during the
nine-month period ended September 30, 2020, when compared with the
nine-month period ended September 30, 2019.
Combined Ratio. We
use the combined ratio to measure our underwriting performance. The
combined ratio is the sum of
the loss ratio and the expense ratio. If the combined ratio is at
or above 100%, we are not underwriting profitably and may not be
profitable. The combined ratio increased from 105.7% for the
three-month period ended September 30, 2019 to 107.7% for the
three-month period ended September 30, 2020. The increase is due
primarily to a lower denominator in net premiums earned as recorded
during the three-month period ended September 30, 2020, when
compared with the three-month period ended September 30,
2019.
The
combined ratio decreased from 228.2% for the nine-month period
ended September 30, 2019 to 129.7% for the nine-month period ended
September 30, 2020. The decrease in the combined ratio is wholly
due to a higher denominator in net premiums earned and reduced
total expenses as recorded during the nine-month period ended
September 30, 2020, when compared with the nine-month period ended
September 30, 2019.
34
FINANCIAL CONDITION – SEPTEMBER 30, 2020 COMPARED TO DECEMBER
31, 2019
Restricted
Cash and Cash Equivalents. As of September 30, 2020, our restricted cash and
cash equivalents decreased by $361 thousand, or 18%, to $1.7
million, from $2.1 million as of December 31, 2019. The decrease is
the net result of the withdrawal of collateral deposit on expiry of
contract during the nine months ended September 30, 2020 and
collateral deposits made during the nine months ended September 30,
2020.
Investments.
As of September 30, 2020, our total
investments decreased by $57 thousand or 8% to $635 thousand, from
$692 thousand as of December 31, 2019. The decrease is primarily a
result of unrealized loss of $343 thousand partially offset by
purchase of equity securities during the nine-month period ended September 30,
2020.
Reserve for Losses and Loss
Adjustment Expenses.
As of September 30, 2020, there was no
change in reserve for losses and loss adjustment expenses from
December 31, 2019. The reserve remained at $0 due to the fact that
there were no significant events and no reported claims in the
nine-month period to necessitate a reserve.
Notes
Payable. As of
September 30, 2020, our notes payable decreased to $216 thousand,
from $600 thousand at December 31, 2019. The decrease is the net
result of the redemption of Series 2019-1 participating notes
coupled with issuance of Series 2020-1 participating notes by our
reinsurance sidecar subsidiary, Oxbridge Re NS during the nine
months ending September 30, 2020.
35
LIQUIDITY AND CAPITAL RESOURCES
General
We are
organized as a holding company with substantially no operations at
the holding company level. Our operations are conducted through our
reinsurance subsidiaries, Oxbridge Reinsurance Limited and Oxbridge
Re NS, which underwrites risks associated with our property and
casualty reinsurance programs. We have minimal continuing cash
needs at the holding company level, with such needs principally
being related to the payment of administrative expenses and
shareholder dividends. There are restrictions on Oxbridge
Reinsurance Limited’s and Oxbridge Re NS’ ability to
pay dividends which are described in more detail
below.
Sources and Uses of Funds
Our
sources of funds primarily consist of premium receipts (net of
brokerage fees and federal excise taxes, where applicable) and
investment income, including interest, dividends and realized
gains. We use cash to pay losses and loss adjustment expenses,
other underwriting expenses, dividends, and general and
administrative expenses. Substantially all of our surplus funds,
net of funds required for cash liquidity purposes, are invested in
accordance with our investment guidelines. Our investment portfolio
is primarily comprised of cash and highly liquid securities, which
can be liquidated, if necessary, to meet current liabilities. We
believe that we have sufficient flexibility to liquidate any
securities that we own to generate liquidity.
As of
September 30, 2020, we believe we had sufficient cash flows from
operations to meet our liquidity requirements. We expect that our
operational needs for liquidity will be met by cash, investment
income and funds generated from underwriting activities. During the
nine months period ending September 30, 2020, we issued
participating notes through our reinsurance sidecar subsidiary,
Oxbridge Re NS. We have no current plans to issue further debt,
other than through additional participating notes and we expect to
fund our operations for the foreseeable future from operating cash
flows, as well as from potential future equity offerings. However,
we cannot provide assurances that in the future we will not incur
indebtedness to implement our business strategy, pay claims or make
acquisitions.
Although Oxbridge
Re Holdings Limited is not subject to any significant legal
prohibitions on the payment of dividends, its subsidiaries Oxbridge
Reinsurance Limited and Oxbridge Re NS are subject to Cayman
Islands regulatory constraints that affect its ability to pay
dividends to us and include a minimum net worth requirement.
Currently, the minimum net worth requirement for each subsidiary is
$500. As of September 30, 2020, each subsidiary exceeded the
minimum required. By law, each subsidiary is restricted from paying
a dividend if such a dividend would cause its net worth to drop to
less than the required minimum.
Cash Flows
Our
cash flows from operating, investing and financing activities for
the nine-month periods ended September 30, 2020 and 2019 are
summarized below.
Cash Flows for the Nine months ended September 30, 2020 (in
thousands)
Net
cash used in operating activities for the nine months ended
September 30, 2020 totaled $278, which consisted primarily of cash
received from investments and net written premiums less cash
disbursed for operating expenses. Net cash provided by investing
activities of $25 was primarily due to the net proceeds from sale
of equity securities. Net cash used in financing activities totaled
$384, which is the net result of redemption of Series 2019-1
participating notes and proceeds on issuance of Series 2020-1
participating notes.
36
Cash Flows for the Nine months ended September 30, 2019 (in
thousands)
Net
cash used in operating activities for the nine months ended
September 30, 2019 totaled $4,439, which consisted primarily of
cash received from net written premiums less cash disbursed for
operating expenses and net loss payments. Net cash provided by
investing activities of $592 was primarily due to the net proceeds
from sale of fixed-maturity securities. Net cash provided by
financing activities totaled $600, which consisted of proceeds on
issuance of Series 2019-1 participating notes.
OFF-BALANCE SHEET ARRANGEMENTS
As of
September 30, 2020, we had no off-balance sheet arrangements as
defined in Item 303(a)(4) of Regulation S-K.
EXPOSURE TO CATASTROPHES
As with
other reinsurers, our operating results and financial condition
could be adversely affected by volatile and unpredictable natural
and man-made disasters, such as hurricanes, windstorms,
earthquakes, floods, fires, riots and explosions. Although we
attempt to limit our exposure to levels we believe are acceptable,
it is possible that an actual catastrophic event or multiple
catastrophic events could have a material adverse effect on our
financial condition, results of operations and cash flows. As
described under “CRITICAL ACCOUNTING
POLICIES—Reserves for Losses
and Loss Adjustment Expenses” below, under GAAP, we
are not permitted to establish loss reserves with respect to losses
that may be incurred under reinsurance contracts until the
occurrence of an event which may give rise to a claim. As a result,
only loss reserves applicable to losses incurred up to the
reporting date may be established, with no provision for a
contingency reserve to account for expected future
losses.
CRITICAL ACCOUNTING POLICIES
We are
required to make estimates and assumptions in certain circumstances
that affect amounts reported in our consolidated financial
statements and related footnotes. We evaluate these estimates and
assumptions on an on-going basis based on historical developments,
market conditions, industry trends and other information that we
believe to be reasonable under the circumstances. These accounting
policies pertain to premium revenues and risk transfer, reserve for
loss and loss adjustment expenses and the reporting of deferred
acquisition costs.
Premium Revenue and Risk
Transfer. We record premiums revenue as earned pro-rata over
the terms of the
reinsurance agreements, or period of risk, where applicable, and
the unearned portion at the balance sheet date is recorded as
unearned premiums reserve. A reserve is made for estimated premium
deficiencies to the extent that estimated losses and loss
adjustment expenses exceed related unearned premiums. Investment
income is not considered in determining whether or not a deficiency
exists.
We
account for reinsurance contracts in accordance with ASC 944,
‘‘Financial Services – Insurance.”
Assessing whether or not a reinsurance contract meets the
conditions for risk transfer requires judgment. The determination
of risk transfer is critical to reporting premiums written. If we
determine that a reinsurance contract does not transfer sufficient
risk, we must account for the contract as a deposit
liability.
Loss Experience Refund
Payable. Certain
contracts include retrospective provisions that adjust premiums or
result in profit commissions in the event losses are minimal or
zero. Under such contracts, the Company expects to recognize
aggregate liabilities payable to the ceding insurers assuming no
losses occur during the contract period. In accordance with GAAP,
the Company will recognize a liability in the period in which the
absence of loss experience obligates the Company to pay cash or
other consideration under the contract. On the contrary, the
Company will derecognize such liability in the period in which a
loss experience arises. Such adjustments to the liability, which
accrue throughout the contract term, will reduce the liability
should a catastrophic loss event covered by the Company
occur.
37
Reserves for Losses and
Loss Adjustment Expenses. We determine our reserves for
losses and loss adjustment expenses on the basis of the claims
reported by our ceding insurers and for losses incurred but not
reported, we utilize the assistance of an independent actuary. The
reserves for losses and loss adjustment expenses represent
management’s best estimate of the ultimate settlement costs
of all losses and loss adjustment expenses.
We believe
that the amounts are adequate; however, the inherent impossibility
of predicting future events with precision, results in uncertainty
as to the amount which will ultimately be required for the
settlement of losses and loss expenses, and the differences could
be material. Adjustments are reflected in the consolidated
statements of operations in the period in which they are
determined.
Under
GAAP, we are not permitted to establish loss reserves until the
occurrence of an actual loss event. As a result, only loss reserves
applicable to losses incurred up to the reporting date may be
recorded, with no allowance for the provision of a contingency
reserve to account for expected future losses. Losses arising from
future events, which could be substantial, are estimated and
recognized at the time the loss is incurred.
As of September 30, 2020, we had no reserves for
loss and loss adjustment expenses due to no significant events
occurring during the period and no reported claims on any contract
s in force. See Note 7 to the consolidated financial
statements.
Our
reserving methodology does not lend itself well to a statistical
calculation of a range of estimates surrounding the best point
estimate of our reserve for loss and loss adjustment expense. Due
to the low frequency and high severity nature of claims within much
of our business, our reserving methodology principally involves
arriving at a specific point estimate for the ultimate expected
loss on a contract by contract basis, and our aggregate loss
reserves are the sum of the individual loss reserves
established.
Deferred Acquisition
Costs. We defer certain expenses that are directly related
to and vary with producing reinsurance
business, including brokerage fees on gross premiums assumed,
premium taxes and certain other costs related to the acquisition of
reinsurance contracts. These costs are capitalized and the
resulting asset, deferred acquisition costs, is amortized and
charged to expense in future periods as premiums assumed are
earned. The method followed in computing deferred acquisition costs
limits the amount of such deferral to its estimated realizable
value. The ultimate recoverability of deferred acquisition costs is
dependent on the continued profitability of our reinsurance
underwriting. If our underwriting ceases to be profitable, we may
have to write off a portion of our deferred acquisition costs,
resulting in a further charge to income in the period in which the
underwriting losses are recognized.
Stock-Based Compensation:
The Company
accounts for stock-based compensation under the fair value
recognition provisions of GAAP which requires the measurement and
recognition of compensation for all stock-based awards made to
employees and directors, including stock options and restricted
stock issuances based on estimated fair values. The Company measures compensation for restricted
stock based on the price of the Company’s ordinary shares at
the grant date. Determining the fair value of share purchase
options at the grant date requires significant estimation and
judgment. The Company uses an option-pricing model (Black-Scholes
option pricing model) to assist in the calculation of fair value
for share purchase options. The Company's shares have not been
publicly traded for a sufficient length of time to solely use the
Company's performance to reasonably estimate the expected
volatility.
38
Therefore,
when estimating the expected volatility, the Company takes into
consideration the historical volatility of similar entities. The
Company considers factors such as an entity's industry, stage of
life cycle, size and financial leverage when selecting similar
entities. The Company uses a sample peer group of companies in the
reinsurance industry as well as the Company’s own historical
volatility in determining the expected volatility. Additionally,
the Company uses the full life of the options, ten years, as the
estimated term of the options, and has assumed no forfeitures
during the life of the options.
The Company uses the
straight-line attribution method for all grants that include only a
service condition. Compensation expense related to all awards is
included in general and administrative expenses.
Item
3.
Quantitative and Qualitative Disclosures About Market
Risk
Because
we are a smaller reporting company, we are not required to provide
this information.
Item
4.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under
the supervision and with the participation of our Chief Executive
Officer (our principal executive officer) and our Chief Financial
Officer (our principal financial officer), we have evaluated the
effectiveness of our disclosure controls and procedures as of the
end of the period covered by this report. Based on that evaluation,
our Chief Executive Officer and our Chief Financial Officer have
concluded that our disclosure controls and procedures were
effective as of the end of the period covered by this
report.
Changes in Internal Control Over Financial Reporting
There
have been no changes in our internal control over financial
reporting that occurred during the quarter ended September 30, 2020
that have materially affected, or are reasonably likely to
materially affect, our internal control over financial
reporting.
PART II – OTHER INFORMATION
Item
1.
Legal Proceedings
We are
not currently involved in any litigation or arbitration. We
anticipate that, similar to the rest of the insurance and
reinsurance industry, we will be subject to litigation and
arbitration in the ordinary course of business.
Item
1A.
Risk Factors
With
the exception of the item described below, there have been no
material changes from the risk factors previously disclosed in the
section entitled “Risk Factors” in our Form 10-K, which
was filed with the SEC on March 23, 2020.
Our operations could be materially and adversely affected by
measures implemented by the Cayman Islands’ government, as
well as international federal, state and local governments to cope
with public health issues such as the outbreak of COVID-19,
resulting in a material impact to our financial position and
results of operations.
39
The
measures undertaken by governmental authorities to combat a serious
public health issue could significantly disrupt or prevent us from
operating our business in the ordinary course for an extended
period and could materially affect our financial position and
operating results.
On
March 11, 2020, the World Health Organization characterized the
outbreak of COVID-19 as a global pandemic. On March 25, 2020, the
Cayman Islands’ government implemented curfew restrictions to
control the spread of COVID-19. Wide-ranging actions undertaken by
local and international government authorities include full
lockdowns, airport shutdowns, travel restrictions, quarantines and
stay-at-home orders. As a result, people are forced to
substantially restrict daily activities resulting in businesses
having to curtail or cease normal operations and furlough or
terminate employees. Such measures cause concerns over the
stability of global markets and threaten prospects for economic
growth.
In
response to the pandemic, we temporarily closed our offices and
asked our employees to work from home until further notice. Since
then the Cayman Islands government have issued stay at home orders
for non-essential workers. We however, reopened our offices in May
2020 after receiving government’s approval with minimal
impact on our operations.
Furthermore,
the disruption of global commercial activities across all market
sectors and the significant declines and volatility in financial
markets could result in a material adverse impact on our financial
position, results of operations and cash flows. Possible effects
may include, but are not limited to a decline the value of equity
securities held by us, and disruption to cash inflows from our
reinsurance business.
Item
2.
Unregistered Sales of Equity Securities and Use of
Proceeds
(a)
Sales
of Unregistered Securities
None.
(b)
Repurchases
of Equity Securities
None.
(c)
Use
of Proceeds
None.
Item
3.
Defaults Upon Senior Securities
None.
Item
4.
Mine Safety Disclosures
Not
applicable.
Item
5.
Other Information
None.
40
Item
6.
Exhibits
The
following exhibits are filed herewith:
|
Exhibit
No.
|
Document
|
|
|
|
|
Certifications
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the
Securities Exchange Act of 1934.
|
|
|
|
|
|
Certifications
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the
Securities Exchange Act of 1934.
|
|
|
|
|
|
Written
Statement of the Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. §1350.
|
|
|
|
|
|
101
|
The
following materials from Oxbridge Re Holdings Limited’s
Quarterly Report on Form 10-Q for the quarter ended September 30,
2020 are filed herewith, formatted in XBRL (Extensible Business
Reporting Language): (i) the Consolidated Balance Sheets, (ii) the
Consolidated Statements of Operations, (iii) the Consolidated
Statements of Comprehensive Income, (iv) the Consolidated
Statements of Cash Flows, (v) the Consolidated Statements of
Changes in Shareholders’ Equity and (vi) the Notes to
Consolidated Financial Statements.
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41
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
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OXBRIDGE RE HOLDINGS LIMITED
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Date:
November 10, 2020
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By:
/s/ JAY
MADHU
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Jay
Madhu
Chief
Executive Officer and President
(Principal
Executive Officer)
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Date:
November 10, 2020
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By:
/s/ WRENDON
TIMOTHY
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Wrendon
Timothy
Chief
Financial Officer and Secretary
(Principal
Financial Officer and Principal
Accounting
Officer)
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42
Exhibit
31.1
Certifications of the Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and
Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of
1934
I, Jay
Madhu, certify that:
1. I
have reviewed this Quarterly Report on Form 10-Q of Oxbridge Re
Holdings Limited;
2. Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
4. The
registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a) Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
(d) Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
5. The
registrant’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
(a) All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
(b) Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
Date:
November 10, 2020
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By:
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/s/ Jay Madhu
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Jay
Madhu
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Chief Executive
Officer and President
(Principal
Executive Officer)
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Exhibit 31.2
Certifications of the Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act and
Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of
1934
I,
Wrendon Timothy, certify that:
1. I
have reviewed this Quarterly Report on Form 10-Q of Oxbridge Re
Holdings Limited;
2. Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
4. The
registrant’s other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a) Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
(d) Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
5. The
registrant’s other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
(a) All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
(b) Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
Date:
November 10, 2020
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By:
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/s/ Wrendon Timothy
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Wrendon Timothy
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Chief Financial
Officer and Secretary
(Principal
Financial Officer and Principal Accounting Officer)
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Exhibit 32
Written Statement of the Chief Executive Officer and Chief
Financial Officer
Pursuant to 18 U.S.C. §1350
Solely
for the purposes of complying with 18 U.S.C. §1350, we, the
undersigned Chief Executive Officer and Chief Financial Officer of
Oxbridge Re Holdings Limited (the “Company”), hereby
certify, based on our knowledge, that the Quarterly Report on Form
10-Q of the Company for the quarter ended September 30, 2020 (the
“Report”) fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of 1934 and that
information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
/s/ JAY
MADHU
Jay
Madhu
Chief
Executive Officer and President
(Principal
Executive Officer)
/s/ WRENDON
TIMOTHY
Wrendon
Timothy
Chief
Financial Officer and Secretary
(Principal
Financial Officer and Principal
Accounting
Officer)
Date:
November 10, 2020