Oxbridge Re Holdings Limited (OXBR) Q2 2025 Earnings Report, Transcript and Summary

Good afternoon, and welcome to Oxbridge Re's Second Quarter 2025 Earnings Call. My name is Dine, and I will be your conference operator this afternoon. [Operator Instructions] Joining us for today's presentation is Oxbridge Re's Chairman, President, Chief Executive Officer, Jay Madhu; and Chief Financial Officer and Corporate Secretary, Wrendon Timothy. Following their remarks, we will open up the call for your questions. I would like to remind everyone that this call will be available via telephone replay until August 28, 2025. Details for the telephone replay are included in the press release issued today. Now I would like to turn the call over to Wrendon Timothy, Chief Financial Officer of Oxbridge Re, who will provide the necessary cautions regarding the forward-looking statements that will be made by management during this call. Over to you, sir.

Thank you, operator. During today's call, there will be forward-looking statements made regarding future events, including Oxbridge Re's future financial performance. These forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as anticipates, estimates, expects, intends, plans, projects and other similar rules and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to various risks and uncertainties. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward- looking statements are included in the section entitled Risk Factors contained in our Form 10-K filed on March 26, 2025 with the Securities and Exchange Commission. The occurrence of any of these risks and uncertainties could have a material adverse effect on the company's business, financial condition and the volatility of our earnings, which in turn could cause significant market price and trading volume fluctuations for our securities. Any forward-looking statements made on this conference call speak only as of the date of this conference call. And except as required by law, the company undertakes no obligation to update any forward-looking statements contained on this call or in any company presentation even if the company's expectations or any related events, conditions or circumstances change. Now I'd like to turn the call over to our Chairman, President and Chief Executive Officer, Jay Madhu. Jay?

Thank you, Wrendon, and welcome, everyone. Thank you for joining us today. Let me start by saying we're proud of the significant steps we have taken to fortify and diversify our business. While we are solidly entrenched in the RWA Web3 space where we issue tokenized reinsurance securities in an RWA or real-world assets, our core business remains reinsurance where we write fully collateralized policies to cover property loss from specific catastrophes. And because we write fully collateralized contracts, we believe we can compete effectively with large carriers. We specialize in underwriting low-frequency, high-severity risks where we believe sufficient data exist to effectively analyze the risk/ return profile of reinsurance contracts. Our objective is to achieve long-term growth in book value per share by writing business on a selective and opportunistic basis that will generate attractive underwriting profits relative to risk. Building on the stable reinsurance foundation, we have begun to diversify our business in 2022. We expanded our business portfolio by establishing SurancePlus Inc., our new subsidiary focused on RWA Web3 technology. SurancePlus specializes in democratizing tokenized real-world assets or RWAs, offering tokenized reinsurance securities as alternative investment opportunities. These securities leverage blockchain technology to ensure complete transparency and compliance with SEC guidelines, representing a significant advancement in the digital security market. This initiative aims to broaden investor participation, extending our opportunities beyond what traditionally has been a select group of ultra-high net worth individuals. We are enthusiastic about the prospects of these 2 new investments and remain committed to keep our stakeholders informed of our progress in the forthcoming quarters. Looking ahead, we intend to position Oxbridge as a prominent player in the real-world asset or RWA and Web3 sector. In summary, we maintain a strong sense of optimism regarding the long-term outlook of our core reinsurance business alongside the successful integration of SurancePlus as we embrace the RWA market more comprehensively. I'll now turn things over to Wrendon and take us through our financial results. Wrendon?

Thank you, Jay. I would like to remind you that our typical contract period is from June 1 to May 31 of the following year. With respect to net premiums earned, net premiums earned for the quarter ended June 30, 2025 increased to $582,000 from $564,000 for the quarter ended June 30, 2024. Net premiums earned for 6 months ended June 30, 2025 increased to $1.18 million from $1.1 million for the 6 months ended June 30, 2024. The increases are due to higher rates on contracts that were in force in the 3 and 6- month periods ended June 30, 2025 when compared to the contracts in force in the prior year periods. Our net investment income and other income for the 3 months ended June 30, 2025 increased to $93,000 from $66,000 from prior year second quarter. These factors combined resulted in total revenues of $654,000 for the 3 months ended June 30, 2025, compared to $44,000 in the prior year second quarter. Our net investment and other income for the 6 months ended June 30, 2025 increased to $173,000 from $126,000 from prior year period. These factors taken together resulted in total revenues of $1.36 million for the 6 months ended June 30, 2025, compared to negative $81,000 in the prior year comparable period. For the quarter ended June 30, 2025, total expenses, which comprise of loss and loss adjustment expenses, policy acquisition costs and general and admin expenses, increased to $2.61 million from $628,000 for the quarter ended June 30, 2024. For the 6 months ended June 30, 2025, total expenses increased to $4.18 million from $1.18 million for the 6 months ended June 30, 2024. These increases are primarily due to the adverse development and loss recognition from Hurricane Milton on 1 of our reinsurance contracts, coupled with increased human resources and personnel costs, professional marketing and IR costs, our Web3 subsidiary tokenization costs, renewed S-3 related costs and legal expenditures when compared with prior year periods. Our net loss for the quarter ended June 30, 2025 was $1.87 million or $0.25 per basic and diluted loss per share, compared to a net loss of $821,000 or $0.14 basic and diluted loss per share for the quarter ended June 2024. Net loss for the 6 months ended June 30, 2025 was $2.01 million or $0.28 basic and diluted loss per share, compared to a net loss of $1.73 million or $0.29 per basic and diluted loss per share for the 6 months ended June 30, 2024. The increases again are primarily due to the adverse development and loss recognition from Hurricane Milton on 1 of our reinsurance contracts during the 3 and 6-month periods ended June 30, 2025 when compared with prior periods. As we have discussed before in our investor calls, we use various measures to analyze the growth and profitability of our business operations. For our reinsurance business, we measure underwriting profitability by determining our loss ratio, acquisition ratio, expense ratio and combined ratio. Our loss ratio, which measures underwriting profitability, is the ratio of loss and loss adjustment expenses incurred to net premiums earned. The loss ratio increased to 394% and 194.8% for the quarter and 6-month periods ended June 30, 2025, respectively, when compared with the prior comparative period. This was due to the full limit loss of approximately $2.3 million on 1 of our reinsurance contracts affected by Hurricane Milton. Net impact of Hurricane Milton's loss on the company's equity, however, after accounting for the portion of losses borne by external tokenholders was approximately $1.2 million. Our acquisition cost ratio, which measures operational efficiency, compares policy acquisition costs to net premiums earned. The acquisition cost ratio remained consistent at approximately 11% for the quarter ended and 6 months ended June 30, 2025 when compared with the quarter and 6-month period ended June 30, 2024. Our expense ratio, which measures operating performance, compares policy acquisition costs and general and admin expenses with net premiums earned. For the quarter ended June 30, 2025, the expense ratio increased to 227% from 111.3% from the quarter ended June 30, 2024. For the 6 month period ended June 30, 2025, the expense ratio increased to 160.7% from 105.7% for the 6 months period ended June 30, 2024. The increases are primarily due to increased professional costs related to Investor Relations and our Web3 subsidiary marketing and operations, renewed S-3 related costs, increased human resources and personnel costs and legal expenditures during the quarter and 6-month periods ended June 30, 2025 when compared with the prior comparable periods. Our combined ratio, which is used to measure underwriting performance, is the sum of the loss ratio and the expense ratio. The combined ratio increased to 621% from 111.3% for the quarter ended June 30, 2024. For the 6-month period ended June 30, 2025, the combined ratio increased to 355.5% from 105.7% for the 6-month period ended June 30, 2024. The increase again is primarily due to losses incurred from Hurricane Milton and increased general and admin expenses during the 3 and 6-month period ended June 30, 2025 when compared with the prior comparable periods. Now turning to the balance sheet. Our investment portfolio decreased to $104,000 at June 30, 2025 from $113,000 at prior year- end, primarily due to the decrease in fair value of equity securities during the 6-month period ended June 30, 2025. Cash and cash equivalents and restricted cash and cash equivalents increased by $760,000 or 12.9% to $6.7 million from $5.9 million as of December 31, 2024. The increase is a net result of premium deposits made during the 6 months ended June 30, 2025, the registered direct offering that generated $2.7 million net of expenses and payment of Hurricane Milton losses and general admin expenses during the period. I'll now turn the call back over to Jay to wrap up before we take any questions. Jay?

Thank you, Wrendon. This quarter marks a pivotal moment for Oxbridge and SurancePlus. We've not only expanded our footprint in the rapidly-growing tokenized reinsurance market, but also forged strategic partnerships that position us for accelerated growth. As the first Nasdaq-listed company to tokenize -- to issue a tokenized reinsurance security, we are proving that innovation and compliance can go hand in hand, creating new opportunities for investors and setting a high standard for the industry. To further accelerate our strategy and strengthen our leadership position, we have scheduled an Extraordinary General Meeting to approve measures that will accelerate our strategy and strengthen our leadership. These initiatives combined with our ongoing focus of transparency position us to capture significant opportunity in the quarters ahead. Building on our Memorandum of Understanding with Plume last quarter, a leading real-world asset platform with an institutional- grade tokenization infrastructure and a track record in scaling compliant blockchain solutions, we have now entered into a strategic partnership with Midnight Foundation, which is an Input Output Growth company, the same founders of Cardano. The Midnight Foundation supports ecosystem growth and enterprise adoption of the Midnight Network, a private focused blockchain developed by Shielded Technologies, a subsidiary of Input Output Global, the team behind Cardano again. Today, these alliances expands SurancePlus' reach, strengthen distribution capabilities and position our platform at the forefront of blockchain-enabled RWA innovation. We have advanced our 2025 and 2026 tokenized reinsurance offerings, which provides some diversity of investment opportunities within the $760 billion reinsurance market TAM, a sector uncorrelated to broader capital markets. Our balanced-yield product targets a 20% annual return and our high-yield product targets a 42% annual return, assuming no underlying losses. By delivering compliant blockchain-powered pathways into this traditionally elusive asset class, we are broadening investor participation and reinforcing our mission to democratize reinsurance investment. This year, we have been an active participant and sponsor at leading blockchain and RWA events globally, including iConnect in Miami, ETHDenver 2025 and RWA Day in Denver, Apex Invest 2025 in the Cayman Islands, Token2049 in Dubai Money20/20 in Europe, in Amsterdam, Permissionless IV and Yield Day NYC in New York and EthCC in Cannes and Rare Evo recently in 2025, again, in Las Vegas. These forums provide an opportunity to showcase SurancePlus, strengthen industry leadership, sign new partnerships and explore collaborative opportunities with leading blockchain platforms. Our achievement in the quarter reflects a disciplined approach to execution and clear vision of the future. With a strong balance sheet, innovative products and an expanding network of strategic relationships, Oxbridge is well positioned to drive sustainable growth, create long-term shareholder value and lead the tokenized reinsurance market into its next phase of evolution. With that, we are ready to open the call for questions. Operator, please provide the appropriate instructions.

[Operator Instructions] The first question that we have comes from Allen Klee of Maxim Group.

Congrats on growing your premium. I was interested in -- sure. You've been very active on the conference front. I was just wondering kind of what takeaways you have to share with us from what you've gotten from all those attendance.

Yes. So first off, Allen, thanks for getting on the call and listening. Conferences, in my opinion, are very important, right, because you have various different people in the ecosystem that can congregate in various different places. And being front and center at these events is very important. We not only gain -- not only glean important information about our ecosystem, but we're also able to talk to folks about how they could -- how we all can add value by collaborating together. So some of the things that we have learned from all these conferences is what investors are, very importantly, want to know is compliance and transparency. So it's great to show yield, everybody wants to see yield, but they also want to know what kind of compliance and transparency are part of our tokenized product. Are we writing -- how are we doing -- what kind of leverage are we putting on our product? What kind of opportunity there is? And they're stunned when we tell them, there's no leverage on our product, we write one to one. And there's total transparency compliance. So SurancePlus has PCAOB-audited financials, as does Oxbridge, everything flows up. But SurancePlus has segregated PCAOB-audited financials, which is, I think, key in making sure that whole compliance aspect works. So we're making some great strides. We're making some great opportunity over here. We've opened a few different doors, some of which we have already put out and some of which we are still working to, which I think would be extremely interesting as we go forward. So all in all, very important to go on the trail, but more importantly, it's important to get the right mix of folks involved.

That's great. You talked about an upcoming EGM meeting and some proposals. Could you elaborate on that, please?

Yes. We -- it's nothing new that we're always very transparent and open. We've put out information in the past that we are looking to get into blockchain space, RWA space in a bigger way. So part of this is not only planning for the future, making sure that we have the right partners and so on involved in this, but it's also important when the timing is right, and let me emphasize, when the timing is right, and we need to do something, we need to make sure that all the bits and pieces are in place. So the EGM that we have over here is making sure that, as opposed to hoping that things will go right once we kind of get into that spot, we are putting all the building blocks in place. So that way, when timing is right, we can move in the right direction. So very interesting space. The current administration has talked widely, widely, about not only the blockchain and crypto space, but they've also, recently in the last 2 days, have talked highly about the RWA space. We're slap-bang in that. Just to put some perspective to this, the reinsurance space is -- the TAM of the reinsurance space is $700 billion. And to just kind of put a point to it, the -- put a point to it, the -- to put a point to it, $150 is the stablecoin TAM, right? So stablecoins, which everybody talks about, the TAM on stablecoins is $150 billion. But reinsurance is a $750 billion market. So compliance, transparency, positioning the company in the right direction, making the right partners, growing the right partnerships and getting it into the right direction is where we're currently working towards.

[Operator Instructions] At this time, this concludes our question-and-answer session. I'd now like to turn the call back over to Mr. Madhu for any closing remarks. Please go ahead, sir.

Thank you for joining us on today's call. Before we conclude, I would like to extend my gratitude to our employees, business partners and investors for their unwavering support. I particularly want to acknowledge our dedicated Oxbridge team whose extensive experience has been instrumental in navigating and advancing our business amidst these challenging circumstances. We anticipate providing you with further updates on our progress during our next call or before. And should you have any additional questions, please do not hesitate to reach out to us any time. Once again, thank you for your time and attention today and for your ongoing interest in Oxbridge.

Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.