Oxbridge Re Holdings Ltd. Q3 FY2023 earnings call

• Oxbridge Re Holdings Limited was founded 10 years ago to provide reinsurance solutions to property and casualty insurers in the Gulf Coast region. - In 2021, began to diversify as lead sponsor of SPAC focusing on disruptive technologies. - In August 2023, Oxbridge Acquisition completed business combination with Jet Token Inc., which operates in software and aviation segments. - In 2023, created Web3 subsidiary SurancePlus Inc. to offer tokenized real-world assets, including first tokenized reinsurance security backed by public company. - In December 2022, incorporated SurancePlus; second quarter 2023 completed first offering of tokens with 2.4 million private placement, expecting Delta category 3 token investors to get up to 42% return if no catastrophe losses. - Wholly owned subsidiary Oxbridge Reinsurance Limited was lead investor in SPAC sponsor, and with Jet Token merger, company renamed Jet.AI Inc. and listed on NASDAQ.

For the quarter ended September 30, 2023, net premiums earned were $549,000, slightly lower than last year's third quarter. For the first 9 months of 2023, net premiums earned were $732,000 compared to $995,000 last year, due to acceleration of premium recognition on 2 reinsurance contracts last year. Investment income and other income rose in the quarter and first 9 months of 2023 due to higher rates on money market funds. Consolidated total revenue for the 9 months ended September 30, 2023 was negative $5.1 million compared to negative $119,000 in the prior year. Net loss was $7.3 million or $1.24 per share for the third quarter of 2023 compared to a net loss of $2.2 million or $0.37 per share last year; for the 9 months ended September 30, 2023, net loss was $7.2 million or $1.23 per share compared to $2.5 million or $0.43 per share last year. Reinsurance business loss ratio decreased to 0% for the 9 months ended September 30, 2023 from 107.8% in the prior year. Acquisition ratio decreased marginally from 11.1% for the 9-month period ended September 30, 2022 to 10.9% for the 9-month period ended September 30, 2023. Expense ratio increased 244.4% for the 9 months ended September 30, 2023 from 116% in the prior period. Combined ratio increased to 244.4% for the first 9 months of 2023 compared to 224.4% last year. Investment portfolio was valued at $608,000 at September 30, 2023 compared to $642,000 at prior year end, decreased due to unrealized loss; other investments decreased due to negative change in fair value of Jet.AI investment; cash and cash equivalents and restricted cash and cash equivalents decreased to $3.6 million at September 30, 2023 from $3.9 million at December 31, 2022.

• SurancePlus' Delta category 3 token investors expected to receive up to 42% return on investment in treaty year if no catastrophe losses. - Tokenized RWA market expected to grow significantly over next decade, with estimate as high as $16 trillion by 2030, and company excited about potential of new business lines for shareholders.

• Forward-looking statements are subject to various risks and uncertainties, detailed in Risk Factors in Form 10-K filed March 30, 2023, and Form 10-Q filed today. Occurrence of these risks could materially affect business, financial condition, and earnings volatility, causing market price and trading volume fluctuations.

Q: How are you all going to be marketing the tokenized securities RWAs?

A: Yes. So that will be marketed through various different folks. We hope to get some of the folks through FinRev-regulated agencies, but there will also be a huge thrust of marketing it ourselves internally to high net worth individuals. So like a Reg D in the U.S. and Reg S outside of the U.S.

Q: What sort of growth rate do you anticipate in the foreseeable future?

A: Yes. What we've done over the last few years is we had our SPV that we were taking capital from individuals and putting those -- putting that capital to work, and we've shown a track record of doing that. Over the last few years, it's worked out quite well. This year, we took that same thought process, rolled it out into a much more scalable platform for SurancePlus, giving us access to the world over, if you would. So while there's always -- while there's always worry about how this is -- this will grow, we expect this will grow quite well, especially with folks this year are getting -- we've changed the nature of the top side of the contracts that we take. So we take contracts that are higher up in the tower, et cetera. But nonetheless, this year, investors are going to get 42%. We're almost at the end of hurricane season. This is looking good. We expect that to grow fairly -- to a fairly sizable event next year -- amount rather.