Oxbridge Re Holdings Limited - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 delivered improved underwriting efficiency and narrower losses: total revenue was $0.692M (vs. -$0.125M in Q1 2024 and $0.422M in Q4 2024) and diluted EPS was -$0.02 (vs. -$0.15 YoY and -$0.05 QoQ).
• The quarter was a modest beat vs. Wall Street: revenue exceeded the $0.654M consensus and EPS came in slightly better than the -$0.02 mean estimate; note only one estimate covered the stock (bolded below) (*. Values retrieved from S&P Global).
• Underwriting ratios improved: expense ratio fell to 95.8% (from 99.8% YoY), combined ratio to 95.8% (from 99.8% YoY), with a 0% loss ratio, reflecting stable catastrophe outcomes.
• Strategic catalysts: a distribution MOU with Plume (4.5B+ in assets), dual tokenized reinsurance offerings targeting 20% and 42% returns, and treasury diversification to Bitcoin/Ethereum; cash and restricted cash rose to $9.6M (+$3.7M QoQ) supported by premium deposits and a $2.7M net capital raise.

What Went Well and What Went Wrong

• What Went Well

  • Discipline in underwriting: “The loss ratio remained consistent at 0%” for Q1, underpinning a 95.8% combined ratio improvement YoY.
  • Strategic distribution: Plume MOU broadens tokenized offering reach—“supporting $4.5 billion in assets and more than 18 million unique wallet addresses”.
  • Product expansion and messaging: management emphasized balanced-yield (20%) and high-yield (42%) tokenized reinsurance products to widen investor appeal. Quote: “We are well-positioned to drive sustainable growth…with innovative products and expanding strategic relationships”.

• What Went Wrong

  • Continued GAAP net loss (though improved): net loss was $0.139M, driven by G&A and tokenholder allocations (income attributable to tokenholders -$0.247M).
  • Elevated expense intensity: expense ratio was 95.8%, reflecting G&A and stock-based comp linked to grant-date share price.
  • Very limited Street coverage: only a single analyst estimate, limiting external validation of trajectory (*. Values retrieved from S&P Global).

Transcript

Operator (participant)

I'm Joe Oxbridge Re Holdings, First Quarter 2025 Earnings Conference Call. My name is Robert, and I'll be your conference operator this afternoon. At this time, all participants will be in a listen-only mode. Joining us for today's presentation is Oxbridge Re Holdings Chairman, President, and Chief Executive Officer Jay Madhu, and Chief Financial Officer and Corporate Secretary Rendon 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 26, 2025. Details for telephone replay are included in the press release issued today. Now, I'd like to turn our call over to your host, Rendon 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.

Wrendon Timothy (CFO)

Thank you, Operator. During today's call, there will be forward-looking statements made regarding future events, including Oxbridge Re Holdings' 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, intents, 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 the risks and uncertainties that can 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 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 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 condition cause the concerns exchanged. Now, I would like to turn the call over to our Chairman, President, and Chief Executive Officer, Jay Madhu. Jay.

Jay Madhu (Chairman, President and CEO)

Thank you, Rendon, and welcome everyone. Thank you for joining us today. Let me start by saying we are 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 token reinsurance securities in an RWA or real-world asset, our core business remains reinsurance, where we rightfully collateralize policies to cover property losses from specific catastrophes. 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 exists to effectively analyze the risk-return profile of reinsurance contracts. Our objective is to achieve long-term growth and book value per share by running business on a selective and opportunistic basis that will generate attractive underwriting profits relative to risk.

Building on the stable reinsurance foundation, we began to diversify our business in 2022. We expanded our business portfolio by establishing Assurance Plus, a new, subsidiary-focused 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. Consequently, this initiative aims to broaden investor participation, extending opportunities beyond what traditionally has been a select group of ultra-high-net-worth individuals. Crucially, the establishment of SurancePlus was achieved without incurring new debt, reflecting our efficient approach to diversification. We are enthusiastic about the prospects of these new investments and remain committed to keeping our stakeholders informed of their progress in the upcoming quarters.

Looking ahead, we intend to position Oxbridge as a prominent player in the real-world or RWA 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 competitively. I'll now turn things over to Rendon to take us through our financial results.

Wrendon Timothy (CFO)

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 premium earned for the quarter ended March 31, 2025, increased to $595,000 from $549,000 for the quarter ended March 31, 2024. The increase is due to the higher recent contracts that were enforced in the quarter ended March 31, 2025, when compared to the contracts enforced in the prior period. Our investment income and other income increased to $79,000 from $62,000 from prior first quarter. We also recognize a $35,000 realized gain on the sale of other investment in Jet.AI. All these factors are taken together, resulting in total revenues of $692,000 for the three months ended March 31, 2025, compared to negative $125,000 in the prior first quarter.

For the three months ended March 31, 2025, total expenses, including policy acquisition costs and general and admin expenses, increased to $520,000 from $548,000 for the quarter ended March 31, 2024. The increase is primarily due to the value of stock-based compensation incurred during the three months pre- and ended March 31, 2025, as a result of higher share price on grant date. For the three months ended March 31, 2025, the company generated net loss of $139,000 or $0.02 per basic undiluted loss per share compared to a net loss of $905,000 or $0.15 per basic undiluted earnings loss per share for the quarter ended March 31, 2024. The decrease in net loss is primarily due to the positive change in the fair value of equity securities and the sale of investments in Jet.AI during the quarter ended March 31, 2025, when compared with the prior period.

As we have discussed before in our investor calls, we use various measures to analyze the growth and profitability for our business operations. For our reinsurance business, we measure underwriting profitability by examining our loss ratio, our acquisition ratio, our expense ratio, and combined ratio. Our loss ratio, which measures underwriting profitability, is a ratio of loss and loss-adjusted expenses incurred in the premium period. The loss ratio remained consistent at 0% for the quarter ended March 31, 2025, compared with the quarter ended March 31, 2024. Our acquisition cost ratio, which measures operational efficiency, compared to policy acquisition costs in the premium earned, the acquisition cost ratio remained consistent at 10.9% for the quarter ended March 31, 2025, compared with the prior quarter.

Our expense ratio, which measures operating performance, compared to policy acquisition costs and general and admin expenses with premium earned, the expense ratio decreased marginally from 99.8% for the three-month period ended March 31, 2024, to 95.8% for the three-month period ended March 31, 2025. The decrease is due to higher net premium earned during the three-month period ended March 31, 2025, when compared with the prior period. Our combined ratio, which is used to measure underwriting performance, is the sum of the loss ratio and the expense ratio. The combined ratio also decreased marginally from 99.8% for the three-month period ended March 31, 2024, to 95.8% for the three-month period ended March 31, 2025. The decrease is due to higher net premium earned during the three-month period ended March 31, 2025, when compared with the prior period.

Looking into the balance sheet, our investment portfolio increased marginally to $116,000 at March 31, 2025, from $115,000 at the prior year, primarily due to the increase in fair value of equity securities during the quarter ended March 31, 2025. Cash and cash equivalents and restricted cash and cash equivalents increased by $3.7 million, or 62.8%, to $9.6 million from $5.9 million as of December 31, 2024. The increase is primarily due to premium deposits made during the three-month ended March 31, 2025, as well as the completion of a registered direct offering that generated $2.7 million net of expenses. I'll now turn the call back over to Jay to wrap up before we take your questions. Jay.

Jay Madhu (Chairman, President and CEO)

Thank you, Rendon. As highlighted earlier in today's discussion, we have implemented decisive measures over the last two years to strengthen and diversify our operations. In December of 2022, we launched SurancePlus with the objective of tokenizing securities representing fractionalized interest in reinsurance contracts underwritten by a reinsurance subsidiary. In the second quarter of 2023, we successfully completed the initial offering of these security tokens known as DeltaCat Re, issued on Avalanche Blockchain. Notably, investors in DeltaCat Re achieved returns exceeding 49%, surpassing the initial 42% projections, despite the challenges posed by Hurricane Idalia, which made landfall as a Category 3 storm in 2023. We believe these are the first tokenized reinsurance securities backed by a publicly traded company, an accomplishment that underscores our ability to lead through innovation.

SurancePlus was established to democratize access to reinsurance as an alternative investment, leveraging blockchain technology to create sophisticated digital securities. Our security tokens are designed to offer broader investor participation, securely and transparently recorded on the blockchain. Using Reg D and Reg S frameworks, investors can seamlessly complete AML, KYC, and document signing requirements, accessing this historically exclusive asset class within minutes. By lowering the financial barriers that have traditionally restricted access to reinsurance, we are making this asset class accessible to a wider range of investors. As part of our commitment to growth and industry leadership, we have actively participated in key global tokenization and blockchain events. This includes Consensus 2024 in Austin, Texas, Token2049 in Singapore, and Token2049 in Dubai, where we engage with industry leaders, innovators, and investors.

Our presence at these forums allowed us to showcase SurancePlus, strengthen industry relationships, and explore collaborative opportunities with prominent blockchain platforms. In addition to our core operations, Oxbridge Re Holdings has initiated a strategic review process, forming a special committee on the board to explore a full range of strategic alternatives for the company and its Web3 division, SurancePlus Holdings Limited. These alternatives may include a sale, spin-out, merger, divestiture, recapitalization, or continuing to operate as a publicly traded entity. In Q1 2025, our board of directors approved the inclusion of Bitcoin, Ethereum, and potentially other cryptocurrencies as part of our corporate treasury reserve strategy. This decision aligns with our commitment to innovation, diversification, and long-term value creation, recognized by the growing global adoption of blockchain-based assets.

We recently announced a memorandum of understanding, or MOU, with Plume, a leading blockchain platform supporting $4.5 billion in assets and more than 18 million unique wallet addresses. This relationship has the potential to significantly expand distribution channels for our tokenized reinsurance offerings, enhancing our presence within the RWA ecosystem. While we continue to explore additional strategic relationships, this partnership highlights our commitment to growth. Building on the Plume MOU, we remain focused on identifying and forming additional strategic partnerships to accelerate our growth in RWA tokenization and Web3 infrastructure. These alliances will enhance distribution capabilities and strengthen investor access for innovative digital securities. As of now, we do not anticipate any material impact from Hurricane Helene. Regarding Milton, we continue to monitor developments and await finalized data. Our disciplined approach to risk management positions us to navigate market dynamics with confidence.

Looking ahead, we are pleased to highlight our 2025 and 2026 tokenized reinsurance offerings, which include two distinct options: a balanced yield tokenized security targeting a 20% annual return, designed for investors seeking stable, attractive yields with moderate risk, and a high-yield tokenized security targeting 42% annual returns, offering a higher risk-reward profile. This two-tiered structure expands our product suite, catering to a broader range of investor preferences and furthering our mission to make institutional-grade reinsurance accessible through blockchain-powered real-world assets. Recent industry reports, including those from Standard Chartered and Sunplus, forecast specific growth in the tokenized asset market, potentially reaching $30 trillion by 2034. As a pioneer in this evolving landscape, we are well-positioned to capitalize on this growth, leveraging our expertise and first-mover advantage. Our achievements today reflect a clear vision and disciplined approach to execution.

With a strong balance sheet, innovative products, and expanding strategic relationships, we are well-positioned to drive sustainable growth and create long-term value for our shareholders. With that, we are ready to open the call for questions. Operator, please provide the appropriate instructions.

Operator (participant)

Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. One moment, please, while we poll for questions. Our first question comes from Kent Engelke with Capitol Securities Management. Please proceed with your question.

Kent Engelke (Chief Economic Strategist)

Hey, Wrendon. Hey, Jay. How is the marketing going on for the tokenized securities? Secondly, you said it's about a $30 trillion market. How much do you think that you all could capture of that market? Obviously, the market is in its infancy. Is there any correlation back to the catastrophic bond market? They started trying to create an ETF. Is there any correlation back to the cat market there?

Jay Madhu (Chairman, President and CEO)

Hey, Ken. Thanks for the question. Marketing efforts are going fine. What we've been targeting, though, is two sides of things, right? Number one is the marketing, but also we've been coupling this with outreach. We currently find ourselves in somewhat of a no-man's world, so to speak. While we are a traditional finance, as you see, company, we are also going into the RWA space, or the Web3, or RWA tokenization aspect of things. We find ourselves in the middle of both worlds. Moving more towards the RWA space, attending the various different conferences, striking relationships with the various different players in this space, we are finding that we're getting more adoption and more acceptance in that space because that's the space we are pivoting towards. It's like turning a battleship, not a speedboat, and I think we're doing that quite well.

We've been focusing a lot in both directions because as we grow into SurancePlus 2.0, I think it's critical that we get more adoption in that side of the world, right, in that piece of it. I think we're doing well with that. As far as the $30 trillion business opportunity over here, the size of company we are currently, even if we got a small, very minuscule piece of that, that's a game changer for Oxbridge and SurancePlus. We continue effortlessly to move forward, and I believe we're making some good progress.

Kent Engelke (Chief Economic Strategist)

Great.

Operator (participant)

As a reminder, if you'd like to ask a question, please press Star one on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Allen Klee with Maxim Group. Please proceed with your question.

Allen Klee (Managing and Senior Research Analyst)

Yes, hi. I'm so sorry. It's a pound one, not a star one, so figure that out. Okay. Congrats on a solid quarter. Just following up on the last question on the marketing for the tokenization, could you tell us what we should kind of look for in terms of information we could be hearing in the next three to six months?

Jay Madhu (Chairman, President and CEO)

Yeah. Hi, Allen. Thanks for the question. I think we're making some good progress. Time will tell. We're not there at the end of it, but I believe we should be in good shape in terms of this next token launch. As you're well aware, we have two sides of the token, two sets of tokens. One is our balanced yield, and one is our high-yield token. The high-yield, we've traditionally offered that, and we target a 42% return, but what we're finding is there's a much larger audience out there that is probably looking for a more sustainable balanced yield. That's where we've come out with our balanced yield token of the 20% token. While it's not completed, while we're not at the end of the situation, I think time will tell, but so far, so good.

Allen Klee (Managing and Senior Research Analyst)

That's great. Talk a little about just the reinsurance market, how you're feeling about the kind of premiums and underwriting and kind of the potential return, just how you're thinking about the overall health of the market that you're pursuing?

Jay Madhu (Chairman, President and CEO)

I'll talk about the health of the market first, right? I think from what we're seeing and what we're hearing, premiums seem to be in various different directions, and we're still working through finalizing contracts and so on, and we won't know that till probably the end of the month. All directions are solid contracts, solid opportunities, solid premiums. In terms of underwriting, what we've also seen now, the majority of the business that we write is in the State of Florida and the various different things that Florida has implemented towards their underwriting situations and the AOB, which is assignment of benefits, etc., is playing out well in situations as it comes to claims. In years gone by, even if these hurricanes had gone through, it would have been a vastly different situation.

Currently, with all the different changes that have come about, what the OIR has put through and the State of Florida has put through, it's boding well for the various different insurance as well as reinsurance companies. Again, we don't have anything, we don't have pure clarity as to where this goes, but so far, we have not been affected, so I take solace with that. It doesn't mean we don't get an email tomorrow or today after this call, right? So far, so good. At the end of the day, the marketing or the market that we're after is the high-yield token. You don't get a 42% return without taking risk. This is something that every now and then will get affected, but traditionally, since 1952, 82% of the time, you don't have a category three hurricane.

Sometimes, actually, the last couple of years, we did have a category three hurricane, but it did not make landfall. A category three in Florida needs to make landfall, and it needs to hit a populated area. Looking at these various different things, the majority of the time, nothing happens, but sometimes when it does happen, it could go wrong. There is that risk-reward with the 42% return token. While we have that, it is a risk that is known, and it is a risk that is acceptable. The balanced yield token, what we are being told, had we had a balanced yield token last year, that would be a non-event at the moment.

How things go are to be determined, but we are confident in where we are in the turn of the business, in turning this battleship, moving from the tradfi, the traditional finance business, to the RWA or Web3 opportunity business, where we are taking additional capital, almost like the hedge fund model, and putting it to work and getting capital as we go forward, attempt to get capital from anywhere in the world where we can do proper AML and KYC, put that money to work. It's a great thing for our business. Now, two things will come from that. One, we, the company, will have access to additional capital and put more money to work and grow the business opportunity together.

The flip side of things will be, as additional capital comes into the RWA space, into the tokenization space, and more capital comes into the reinsurance space through tokenization, a few different things will happen. A, the companies that are doing that will do well, but also the homeowner or the policyholders will achieve a slightly better rate as they go forward because there's more capital coming into the ecosystem of reinsurance. It's a win-win on both sides.

Allen Klee (Managing and Senior Research Analyst)

Makes sense. Yeah. I have looked at, I am sure you know well too, some of the companies that have reported that do insurance and leverage to Florida for their first quarter, good numbers and good outlook. That is encouraging. In terms of the partnership you talked about, that sounds like that could be a good distribution channel. Could you talk a little bit more about how this actually works?

Jay Madhu (Chairman, President and CEO)

Yes. The MOU that we signed with Plume, that could be a very good distribution channel because they have a highly evolved ecosystem. While we have Plume, we were in Token2049 in Dubai, and we were on a panel invited by Midnight. Midnight is a new chain that's coming out. It's born from the Cardano chain. We were invited by the folks from Midnight, and the folks from BitGo were also on that same panel. We are making some strides to where before we were standing from afar looking in the inside. Now we are making some strides with some of the larger players in the ecosystem where they are recognizing there is a marked difference between crypto as opposed to tokenized securities.

Moving forward, I think we are in great shape in terms of the various different folks that we are working with. That's SurancePlus 2.0. We're evolving. We're moving more into that section, but while we are moving more in that direction, we are working within the framework of what the SEC allows us to do, the do's and don'ts. We're very careful to make sure that we color within the lines.

Allen Klee (Managing and Senior Research Analyst)

That's great. Okay. Thank you very much.

Jay Madhu (Chairman, President and CEO)

Thank you.

Operator (participant)

As a reminder, if you'd like to ask a question, please press Star one on your telephone keypad. One moment, please, while we poll for questions. At this time, this concludes our question and answer session. I'd now like to turn the call back over to Mr. Madhu for closing remarks.

Jay Madhu (Chairman, President and CEO)

Thank you for joining us on the call today. 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 and expertise have 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. Should you have any additional questions, please do not hesitate to reach out to us anytime. Once again, thank you for your time and attention today and for your ongoing interest in Oxbridge. Operator?

Operator (participant)

Before we conclude today's call, I'd like to remind everyone that a recording of today's call will be available for replay via a link available in the investor sections of the company's website. Thank you for joining us today for our presentation. You may now disconnect.