Oxbridge Re Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2023

There are 4 speakers on the call.

Operator

Good afternoon. Welcome to Oxbridge Tree's Second Quarter 2023 Earnings Call. My name is Chloe, and I will 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's Chairman, President and Chief Executive Officer, Jay Madhu and Chief Financial Officer and Corporate Secretary, Wrendon Timothy.

Operator

Following their remarks, we will open up the call for your questions. I would like to remind everyone this call is also being broadcast live via webcast and available via webcast replay until August 28, 2023 on the Investor Information section of Oxbridge Re's website atwww.oxbridgere.com. Now I would like to turn the call over to Wrendon Timothy, Chief Financial Officer of Oxbridge Reade, who will provide the necessary cautions regarding the forward looking statements that will be made by management during this call.

Speaker 1

Thank you, operator. During today's call, there will be forward looking statements made regarding future events, including Oxford Realty'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.

Speaker 1

A detailed discussion of these 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 ks filed on March 30, 2023 and our Form 10 Q filed 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 the company's expectations or any related events, conditions or circumstances change. Now, I would like to turn the call over to our Chairman, President and Chief Executive Officer, Jay Nobile.

Speaker 1

Jay?

Speaker 2

Thank you, Randall, and welcome, everyone. Thank you for joining us today. Before we start, I would like to take a moment to provide a brief overview of our company. Oxbridge Holdings Limited was founded 10 years ago with a mission to provide reinsurance solutions primarily to property and casualty insurers in the Gulf Coast region of the United States. We are very proud to be celebrating our 10th anniversary this year.

Speaker 2

Through our licensed reinsurance subsidiary, Oxbridge Reinsurance Limited and our licensed reinsurance SPV or special purpose vehicle, Oxbridge Reins, We write fully collateralized policies to cover property losses for 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 risk where we believe sufficient data exists to efficiently 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. We diversified our business in 2021 by being a lead in the sponsor of Oxford Acquisition Corp, a special purpose acquisition company or SPAC focusing on investing in disruptive technologies.

Speaker 2

Subsequent to the Q2 on August 10, 2023, Oxbridge Acquisition completed its business combination with Jet AI. Jet AI develops software leveraging artificial intelligence and offers traction aircraft ownership, jet car aircraft brokerage and charter through its fleet of private aircraft and those of its operating partner. Jet AI operates under along 2 segments, software and aviation. The software segment features the B2C Charter GPT app and the B2B Jet dotai operator platform. The Charter GPT app uses natural language processing and machine learning to improve private looking experience.

Speaker 2

The Jet AI Operator Platform offers a suite of standalone software products to enable FAA Part 135 charters charter providers to add revenue, maximize efficiency and reduce environmental impact. The Aviation segment features jet aircraft fractions, jet cards, on fleet charter management and buyer's brokerage. Jet AI also recently announced the launch of Dynaflight, a carbon offset transaction platform built for both commercial and private aviation operators. The platform enables aviation businesses to offset their carbon emissions with the purchase of carbon removal credits that fund the direct extraction of carbon dioxide from the atmosphere. We also further diversified our business with the creation of our new Web3 focus subsidiary, Insurance Plus Inc.

Speaker 2

The company offers an alternative investment opportunity leveraging key insights and qualities of watching technology to create a well designed digital security under SEC guidelines that have complete transparency and compliance. During the Q2, Insurance Plus completed a private placement offering of security tokens, which assuming no losses are expected to generate a potential return of approximately 42% a year. This new trust is an entry into Web3 and digital securities market, which puts a whole which puts real world assets on the blockchain and opens an entirely new avenue of democratizing reinsurance and potentially other opportunities in the future. Insurance Plus is now a brand new well capitalized business and growth opportunities for our shareholders. And to reiterate, this new opportunity was created without any debt and no dilution.

Speaker 2

We are very proud of this accomplishment and look for this exciting new entity to diversify and accelerate our growth prospects in the years ahead. We are very pleased about both these new investments and look forward to keeping you appraised of their progress in the coming quarters. Regarding our investment portfolio, we remain opportunistic as we deploy capital when favorable return opportunities arise that can contribute to the growth of capital and surplus in our licensed reinsurance subsidiaries over time. Over the long term, we remain highly opportunistic about the prospects pardon me, highly optimistic about the prospects of our core reinsurance business and our 2 new investments in Jet dotai as well as Shorts Plus. I'll now turn things over to Renan to take us through our financial results.

Speaker 1

Thank you, Jay. I would like to remind you that our typical contract period is from June 1 to May 31st the following year. Net premiums earned for the quarter ended June 20, FY23 were $183,000 slightly lower than the $194,000 in last year's Q2. For the full 6 months of 2023, net premiums were $183,000 down from $404,000 in the same period last year. The decrease is due to the number and size of reinsurance contracts in force during the period.

Speaker 1

There have been no losses to date incurred in 2023 or 2022. Our investment income and other income rose in the quarter under full 6 months of 2023 due to higher rates on the money market funds. We generated 505,000 unrealized gain in the first half of twenty twenty three due to a fair value change in our equity investment in Oxbridge Acquisition Corp. We also recognized a $81,000 positive change in the fair value of our equity securities as of June 30, 2023, much improved from the $342,000 negative change in the prior year. All of these factors taken together resulted in total revenue of $691,000 for the 3 months ended June 30, 2023 compared to $503,000 in the prior year Q2.

Speaker 1

For the 6 months of 2023, total revenue was $1,200,000 compared to $500,000 for the same period last year. Total expenses including loss and risk adjustment expenses, policy acquisition costs and general and admin expenses were up in the Q2 and the full 6 months of 2023 compared to last year due primarily to inflation costs for patients, increased personnel costs as well as the recognition of all of the one time offering costs related to strong split offering in the 2nd quarter. Finally, due to the one time G and A offering cost in the 2nd quarter, we generated a net loss of $85,000 or 0.01 dollars per share compared to net income of $77,000 or $0.01 per share in the last year Q2. For the 6 months ended June 2023, net profit was $7,000 compared to a net loss of $0.03 or $0.05 per share in the same period last year. The improvement this year was due to higher revenue driven by the increase in our ARIA gains on investments, equity securities and management fee income from the short plus offering that more than offset the increase to maintain general admin expenses associated with short plus token offerings and the increased procurement costs.

Speaker 1

As we have discussed before on investor calls, we use various measures to analyze reinsurance business. We measure underwriting profitability by examining 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 in the pre existing. With no loss or loss adjustment expenses in either 2020 or 2020, the loss ratio was 0% for both years. Our acquisition cost ratio, which measures operational efficiency compared to the acquisition cost in the premiums earned, the acquisition ratio remained consistent of approximately 10.9% for the 3 year 6 month periods ended June 2023 compared to the same period in the prior year.

Speaker 1

The expense ratio which measures operating performance compared to policy acquisition costs and general and administrative expenses with net premiums earned. Expense ratio for the 3 month period ending June June 30, 2023, increasing to 11.3% to 380.9% and for the 6 months ended June 30, 2023 from 91.1 percent to 61.6 percent when compared with prior years. Increases were due to inflationary fluctuations, increased personnel costs, as well as the recognition in the Q2 of 2020 of all of the one time offering costs associated with the completion of the short subsequent offering. Our combined ratio, which is used to measure on the rest in performance is the sum of the loss ratio and expense ratio. The combined ratio for 3 month period and the June digit 2018 increased to 11.3% to 3.9%.

Speaker 1

And for the 6 months ended June digits went directly from 191.1% to 61.6% when compared to the prior year period. Again, the increases were due to inflationary expense for tuition, increased personnel costs as well as recognition during the Q2 of all the one time offering costs associated with the completion of the Shawmut program offering. Noted into the balance sheet, our investment portfolio increased 723, to $723,000 at June 30, 2023 from $642,000 at the prior year, largely due to gains experienced so far this year. Other investment increased due to the positive change in the fair value for investment in Narcissus Jacqueline. Cash and cash equivalents and restricted cash and cash equivalents to $3,500,000 attributable to the year compared to $3,900,000 at December 31, 2022.

Speaker 1

Total shareholders at the end of Q1 increased to 51 point $1,000,000 or $0.025 per common share. Now I'd like to turn the call back over to Jay to wrap up before we take your questions. Jay?

Speaker 2

Thank you, Wrendon. As you may know, in January this year, we incorporated Insurance Plus, a wholly owned subsidiary of Oxbridge Re. Insurance Plus will issue tokenized securities that directly represent fractionalized interest in reinsurance contracts underwritten by our reinsurance subsidiary. Token holders will receive a return on the performance of these underlying reinsurance contracts. As mentioned, during the Q2, we were pleased to have completed the first offering of these tokens with a $2,400,000 private placement offering.

Speaker 2

Assuming there are no casualty losses, reinsured by Oxbridge, token investors are expected to receive a significant return of approximately 42%. Assurance plus will democratize access to reinsurance with an alternative investment opportunity that leverages the key qualities of blockchain technology to create a well designed digital security. Our tokens will enable more investors to participate and have their interest permanently and transparently recorded on a blockchain. These opportunities were typically unavailable to investors in the past due to a high barrier to entry. Following this exciting opportunity, in late February, we utilized our investment in a special purpose acquisition company, Oxbridge Acquisition Corp, to embark on a business combination with Jet dotai.

Speaker 2

Jet dotai develops software leveraging artificial intelligence and offers threshold aircraft ownership, jet card, aircraft brokerage and charter to its fleet of private aircraft and those of its operating partner. Jet AI operates along 2 segments, software and aviation. Our wholly owned subsidiary, Oxbridge Reinsurance Limited is a lead investor in the SPAC sponsor and holds 1,500,000 shares and 3,500,000 private warrants. We beneficially own in the SPAC. We are pleased to report the completion of the business combination with JET token on August 10.

Speaker 2

These exciting new investment opportunities further diversify our business and risk profile, positioning us to capitalize on growth in emerging technologies. We are very excited about the future value of these investments and the potential they bring to our shareholders. So in closing, our book value per share at quarter end is $2.63 per share. Our business is well diversified. Our investment in Insurance Plus positions us in a new leading edge Web3 focused technology business.

Speaker 2

Insurance Plus was created without any debt and no equity dilution. Our investment in Oxford AcquisitionJet AI and Artificial Intelligence Aviation Business is on track. We remain debt free. We have a strong balance sheet and more importantly, we have real opportunity based on viable business model that is based on diversification. We remain opportunistic not only in our core business, but also our broader view of the market.

Speaker 2

With that, we are ready to open the call for questions. Operator, please provide the appropriate instructions.

Operator

Thank you, sir.

Speaker 3

I just wanted to say congratulations in regards to getting all the accomplishments of this 1st 6 months of this year. A lot of hard work, looking forward to all this becoming profitable and really start increasing the value of Oxbridge. So congratulations on all your successes there.

Speaker 2

Thank you, Ken. Appreciate it. That's been an easy road.

Speaker 3

For sure. We've had a lot of offline conversations. And again, it's great how you guys moving forward and look forward to seeing how this all unfolds in the intermediate future.

Speaker 2

Excellent. Thank you again. Appreciate it.

Speaker 1

Thanks, Ken.

Operator

At this time, this concludes our question and answer session. I'd now like to turn the call back over to Mr. Madhu for his closing remarks.

Speaker 2

Thank you for joining us on today's call. I just have one quick correction on my script. I mentioned the book value incorrectly, the book value is $2.59 It was correct on written statements. So thank you for joining us on today's call. Before we wrap up, I want to thank our employees, business partners and investors for their continued support.

Speaker 2

I especially want to express our gratitude to our Oxbridge team who continue to leverage this significant experience to manage and build our business during these challenging times. We look forward to updating you on our next call. And if you have any further questions, please contact us anytime. Thank you again for your time and attention today and your interest in Oxbridge. Operator?

Operator

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

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Earnings Conference Call
Oxbridge Re Q2 2023
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