Oxbridge Re Holdings Limited (OXBR) Q1 2026 Earnings Report, Transcript and Summary

Good afternoon. Welcome to Oxbridge's First Quarter 2026 Earnings Call. My name is Denise, and I will be your conference operator this afternoon. [Operator Instructions] Joining us on today's presentation is Oxbridge's Chairman, President and Chief Executive Officer, Jay Madhu; and Chief Financial Officer and Corporate Secretary, Wrendon Timothy. Following their remarks, we will open up the call for your questions. I would like to remind everyone that this call will be available via telephone replay until May 21, 2026. 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, who will provide the necessary cautions regarding the forward-looking statements that will be made by management during this call. Please go ahead, 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 words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to various risks and uncertainties. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled Risk Factors contained in our Form 10-K filed on March 30, 2026, 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 can 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. Now I would 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 strong performance of our business and progress we're making executing on our long-term strategy. At our core, we are a disciplined reinsurance business, writing fully collateralized policies covering property catastrophe risk. We compete through selective data-driven underwriting with a focus on generating attractive risk-adjusted returns and long-term growth in book value per share. Our strategy centers on low frequency, high severity risks, where sufficient data exists to rigorously evaluate the risk return profile. We emphasize disciplined risk selection, appropriate pricing and thoughtful structuring, supported by fully collateralization to ensure transparency and alignment. At the same time, we continue advancing SurancePlus and our broader real-world asset initiatives, expanding access tokenized reinsurance opportunities through strategic ecosystems relationships involving Solana, Alphaledger and LayerZero. As we approach May 31, 2026, conclusion of the current contract season, our existing tokenized reinsurance offerings remain unaffected with the balance yield token currently tracking 25% ahead of its original 20% targeted return, while the high-yield token remains on track towards its 42% targeted return. We believe this combination of underwriting discipline, platform development and expanding ecosystem relationships positions Oxbridge well as we continue executing on opportunities within the growing real-world asset market. I will now turn the call over to Brandon to take us through our financial results. Wrendon?

Thank you, Jay. I would like to remind you that our typical contract period is from June 1 to May 31 of the following year. Net premiums written for the 3 months ended March 31, 2026, decreased to $555,000 from $595,000 for the quarter ended March 31, 2025. The decrease is due to a lower weighted average rate on reinsurance contracts in during the quarter ended March 31, 2026, when compared with the prior period. Our net investment income and other income for the 3 months ended March 31, 2026, decreased to $68,000 from $29,000 from prior comparable period. Along with net premiums, our total revenue amounted to $623,000 for the 3 months ended March 31, 2026, compared to $692,000 in the prior year comparable period. For the 3 months ended March 31, 2026, total expenses included policy acquisition costs and general admin expenses increased to $583,000 from $578,000 for the quarter ended March 31, 2025. The increase is primarily due to professional costs, investor relations and our work through subsidiary marketing. Net income for the quarter ended March 31, 2026, was $22,000 or 0 basic and diluted income per share compared to a net loss of $139,000 or $0.02 basic and diluted loss per share for the prior year quarter. The decrease in net loss is primarily due to a decreased allocation of underwriting income to token holders as the company itself is a major contributor in the 2025, 2026 treaty contract in place. Coupled with a decrease in unrealized loss on other investments during the quarter ended March 31, 2026, when compared with the prior period. As we have discussed before on 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 examining our loss ratio, acquisition ratio, expense ratio and combined ratio. The loss ratio is a ratio of loss sales and loss adjustment expenses include the premiums earned and it measures the underwriting profitability of our reinsurance business. The loss ratio remained consistent at 0% for the 3 months ended March 31, 2026, when compared with the prior year comparative period. Our acquisition cost ratio, which measures operational efficiency, compares policy acquisition costs and net premiums earned. The acquisition cost ratio increased marginally to 11% for the quarter ended March 31, 2026, up from 10.9% for the prior year quarter. Our expense ratio, which measures operating performance compares policy acquisition costs and general and admin expenses with net premiums earned. For the 3-month period ended March 31, 2026, the expense ratio increased to $105,000 from $95,800 for the 3 months ended March 31, 2025. The increase is primarily due to increased professional costs, investor relations and our work through marketing and operations. Our combined ratio, which is used to measure underwriting performance, is the sum of the loss ratio and the expense ratio. For the 3 months ended March 31, 2026, the combined ratio increased to 105% from 95.8% for the 3 months ended March 31, 2025. The increase again is primarily due to increased professional costs related to Investor Relations and our W3 subsidiary marketing and operations. Now turning to the balance sheet. Cash and cash equivalents and restricted cash and cash equivalents increased by $1.21 million to $8.19 million, up from $6.98 million as of December 31, 2025. The increase is a net result of premium deposits made in the 3-month period ended March 31, 2026, as well as $1 million proceeds from a short-term loan that was secured. I'll now turn the call back over to Jay to wrap up before we take your questions. Jay?

Thank you, Wrendon. We are encouraged by the strong performance of our 2025, '26 tokenized reinsurance contracts. As we approach the conclusion of the current contract season, our existing offerings remain unaffected with the balance sheet token currently tracking 25% ahead of its original 20% targeted return, while the high-yield token remains on track towards this 42% targeted return. These results reflect our disciplined underwriting approach and further demonstrate the ability of tokenized reinsurance structures to provide differentiated uncorrelated returns with the approximately $750 billion global reinsurance market. We have also continued advancing the reach and visibility of SurancePlus platform through strategic relations involving Solana, Alphaledger and LayerZero, supporting expanded interoperability and ecosystem access across more than 160 blockchain networks. We believe these relationships position SurancePlus within a growing ecosystem for real-world asset adoption. As we look ahead to the 2026, '27 underwriting cycle, we are preparing our T20 and T42 offerings targeting annual returns of 20% and 42%, respectively. Recent forecast from the Colorado State University indicate the potential for a more constructive hurricane environment relative to recent years, supported in part by anticipated El Nino conditions. In parallel, we are making meaningful progress in advancing opportunities to broaden the SurancePlus model into additional high-quality cash-generating asset categories, including initiatives involving tokenized data center revenue streams and infrastructure aligned with the continued growth of artificial intelligence. As of March 31, 2026, the company reported $8.19 million in cash and restricted cash, supporting our ongoing strategic initiatives and long-term growth opportunities. Overall, we remain focused on disciplined execution, expanding ecosystem relationships and scaling our business through our growing real-world asset initiatives as we continue building long-term shareholder value. With that, we are ready to open the call for questions. Operator, please provide the appropriate instructions.

[Operator Instructions] The first question we have comes from Kent Engelke of Capitol Securities.

Again, I'm very interested in the comments that you're making about using tokenized data center for revenue streams and the like and just the infrastructure growth within AI and stuff like that. Larry Fink the other day, predicted that there's going to be a massive futures market for computing power using tokenized assets and the like. Can you give a little bit more color on that really, I think, really cool part of your organization?

Yes. Thank you, Kent. We've been tokenizing reinsurance contracts, right? So reinsurance is a significantly large TAM market. The AI data center space over here could probably dwarf that significantly as well. And since we've been tokenizing reinsurance, we've made great strides over there. And we could potentially tokenize other opportunities as well, while it's a little early for us to talk about that just yet. But in the past, people have asked us, when would you probably consider tokenizing other items, right? And I think the timing is right. As you just mentioned, not only Larry Fink, but various other folks have talked about tokenization. And we seem to have -- we seem to be doing this under the 4 corners of the SEC. So I believe we have an amazing opportunity ahead of us, and we definitely plan on seizing that.

Cool. So it is an exciting new industry on so many different levels, competing with some very deep pocketed people that see something as similar as you do. And obviously, hoping that Oxbridge is going to be at the forefront of all this.

Yes, absolutely.

[Operator Instructions] We have a question from Duane Roberts of Charis Industries.

When you're talking -- when you're saying that you're looking to tokenize -- maybe I didn't hear it right, you're going to looking to tokenize other assets. Is that correct? Besides reinsurance?

Yes, potentially, yes. But I, unfortunately, Duane, can't speak in detail about that. It's opportunities we're still evaluating. But as I just mentioned, if we're able to tokenize an elusive asset such as reinsurance, it gives us -- we feel well about the potential of SurancePlus going forward with other assets.

Okay. You may not comment on this, like how hard is that like the process? The one thing that you mentioned earlier with the other caller was that it was under the SEC, so which is I would assume is significant. So how you're looking at other potential assets back office part, all of the software on it? How hard is it?

Yes, it's extremely hard, right? Because if it wasn't hard, other people will be doing it. And because the barrier to entry is also high, it's an opportunity that Oxbridge can take advantage of it.

[Operator Instructions] At this stage, there seems to be no further questions on the conference. I will now hand back to Jay Madhu for 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 future updates on our progress during our next call. And should you have any additional questions, please do not hesitate to reach out to us any time. Once again, thank you for your time and attention today and for your ongoing interest in Oxbridge. Operator?

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