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Oxbridge Re Holdings Limited Reports Third Quarter 2018 Results

GRAND CAYMAN, CAYMAN ISLANDS / ACCESSWIRE / November 13, 2018 / Oxbridge Re Holdings Limited (NASDAQ: OXBR), a provider of reinsurance solutions primarily to property and casualty insurers in the Gulf Coast region of the United States, reported financial results for the third quarter ended September 30, 2018.

Third Quarter 2018 Results

Net income totaled $652,000 or $0.11 per basic and diluted common share, compared with a net loss of $23.0 million or $(3.97) per basic and diluted common share in the third quarter of 2017. The significant increase in net income was wholly due to the triggering during the third quarter of 2017 of limit losses on all reinsurance contracts, due to the individual and collective impact of Hurricane Harvey, Hurricane Irma and Hurricane Maria on the company's book of business, compared with no catastrophic losses during third quarter of 2018.

Net premiums earned totaled $700,000 compared with $19.3 million in the third quarter of 2017. The decrease in net premiums earned was primarily due to the previous acceleration of premium recognition due to full limit losses being incurred on all reinsurance contracts during the quarter ended September 30, 2017, as well as significantly lower capital deployed during the third quarter of 2018, when compared to the same quarter of the prior fiscal year.

Net investment income totaled $100,000, plus $118,000 of change in fair value of equity securities, which as offset by $61,000 of net realized investment losses. This compares with $128,000 of net investment income offset by $104,000 of net realized investment losses in the third quarter of 2017.

Total expenses, including losses and loss adjustment expenses, policy acquisition costs and underwriting expenses, and general and administrative expenses, were $368,000 compared with $42.3 million in the third quarter of 2017. The decrease in total expenses is primarily due to the fact that neither any losses nor adverse loss development occurred during the quarter ending September 30, 2018, compared with significant loss and loss adjustment expenses during the same quarter of the prior fiscal year due to Hurricanes Irma, Harvey and Maria.

At September 30, 2018, cash and cash equivalents, and restricted cash and cash equivalents, totaled $12.1 million compared with $10.9 million at December 31, 2017.

Third Quarter 2018 Financial Ratios

Loss ratio, which measures underwriting profitability, is the ratio of losses and loss adjustment expenses incurred to net premiums earned. The loss ratio was 0.0% for the third quarter of 2018, compared with 214.4% for the third quarter of 2017. The decrease in the loss ratio was due to the significant loss and loss adjustment expenses incurred in the prior period quarter due to limit losses on all then-active contracts, compared to no loss and loss adjustment expenses in the quarter ended September 30, 2018.

Acquisition cost ratio, which measures operational efficiency, compares policy acquisition costs and other underwriting expenses with net premiums earned. The acquisition cost ratio was 9.0% for the third quarter of 2018 compared with 2.7% for the same year-ago period. The increase in the acquisition cost ratio was due to the overall higher weighted-average acquisition costs on reinsurance contracts in force during the quarter ended September 30, 2018, compared with quarter ended September 30, 2017.

Expense ratio, which measures operating performance, compares policy acquisition costs, other underwriting expenses and general and administrative expenses with net premiums earned. The expense ratio totaled 33.5% during the third quarter of 2018 compared with 4.6% for the third quarter of 2017. The increase in the expense ratio was due primarily to a lower denominator in net premiums earned and net income from derivative instruments as recorded during the quarter ended September 30, 2018, when compared with the quarter ended September 30, 2017.

Combined ratio, which is used to measure underwriting performance, is the sum of the loss ratio and the expense ratio. If the combined ratio is at or above 100%, underwriting is not profitable. The combined ratio totaled 33.5% for the third quarter of 2018 and 219.0% in the same year-ago period. The decrease in the combined ratio was wholly due to lower loss ratio during the quarter ended September 30, 2018, when compared with the quarter ended September 30, 2017.

Nine Months Ended September 30, 2018 Financial Results

Net income totaled $706,000 or $0.12 per basic and diluted common share, compared with net loss of $20.6 million or $(3.53) per basic and diluted common share for the first nine months of 2017. The significant increase in net income was wholly due to the triggering during the nine months ended September 30, 2017 of limit losses on all reinsurance contracts, due to the individual and collective impact of Hurricane Harvey, Hurricane Irma and Hurricane Maria on the company's book of business, compared with no catastrophic losses during the nine months ended September 30, 2018.

Net premiums earned totaled $1.3 million compared with $23.3 million for the first nine months of 2017. The decrease in net premiums earned was primarily due to the previous acceleration of premium recognition due to full limit losses being incurred on all reinsurance contracts during the quarter ended September 30, 2017, as well as significantly lower capital deployed during the first nine months of 2018, when compared to the same period of the prior fiscal year.

Net investment income totaled $280,000, plus $22,000 of change in fair value of equity securities, which was offset by $237,000 of net realized investment losses. This compares with $341,000 of net investment income, which was offset by $56,000 of net realized investment losses for the first nine months of 2017.

Total expenses, including losses and loss adjustment expenses, policy acquisition costs and underwriting expenses, and general and administrative expenses, were $1.1 million compared with $44.2 million in the first nine months of 2017. The decrease in total expenses is primarily due to the fact that neither any losses nor adverse loss development occurred during the nine months ending September 30, 2018, compared with significant loss and loss adjustment expenses during the same period of the prior fiscal year due to Hurricanes Irma, Harvey and Maria.

Nine Months Ended September 30, 2018 Financial Ratios

The loss ratio was 0.0% compared to a loss ratio of 181.8% during the first nine months of 2017. The decrease was due to the significant loss and loss adjustment expenses incurred in the prior nine-month period due to limit losses on all then-active contracts, compared to no loss and loss adjustment expenses in the nine months ended September 30, 2018.

The acquisition cost ratio was 8.1% compared with 2.9% for the same year-ago period. The increase in acquisition cost ratio was due to the overall higher weighted-average acquisition costs on reinsurance contracts in force during the nine-month period ended September 30, 2018, compared with nine-month period ended September 30, 2017.

The expense ratio was 53.8% compared with 7.6% for the first nine months of 2018. The increase in expense ratio was due primarily to a lower denominator in net premiums earned and net income from derivative instruments as recorded during the nine-month period ended September 30, 2018, when compared with the nine-month period ended September 30, 2017.

The combined ratio was 53.8% compared with 189.3% for the year-ago period. The decrease in combined ratio was wholly due to a lower loss ratio during the nine-month period ended September 30, 2018, when compared with the nine-month period ended September 30, 2017.

Subsequent Events

Hurricane Michael, the most powerful storm to hit Florida Panhandle on record, made landfall on October 10, 2018. Preliminary information indicates that this storm has caused significant losses within the insurance industry generally. The Company has suffered a net loss to its capital and earnings, after taking into consideration its quota-share arrangement through its reinsurance sidecar, of approximately $3.1 million or ($0.54) per basic and diluted share. As such, the Company's book value per share will be reduced from $2.57 per basic and diluted share at September 30, 2018, to $2.03 per basic and diluted share, as a result of the loss suffered due to Hurricane Michael.

Management Commentary

''Looking ahead, we continue to evaluate additional opportunities for growth as well as diversification of risk. We remain well positioned to take advantage of the reinsurance landscape before us,'' said Oxbridge Re Holdings president and chief executive officer Jay Madhu.

Conference Call

Management will host a conference call later today to discuss these financial results, followed by a question and answer session. President and Chief Executive Officer Jay Madhu, and Chief Financial Officer Wrendon Timothy will host the call starting at 4:30 p.m. Eastern time.

The live presentation can be accessed by dialing the number below or by clicking the webcast link available on the Investor Information section of the company's website at www.oxbridgere.com.

Date: Tuesday, November 13, 2018
Time: 4:30 p.m. Eastern time
Listen-only toll-free number: 877-407-0782
Listen-only international number: 201-689-8567

Please call the conference telephone number 10 minutes before the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Precision IR at 919-481-4000 or operations@issuerdirect.com.

A replay of the call will be available by telephone after 4:30 p.m. Eastern time on the same day of the call and via the Investor Information section of Oxbridge's website at www.oxbridgere.com until December 13, 2018.

Toll-free replay number: 877-481-4010
International replay number: 919-882-2331
Conference ID: 40108

About Oxbridge Re Holdings Limited

Oxbridge Re (www.oxbridgere.com) is a Cayman Islands exempted company that was organized in April 2013 to provide reinsurance business solutions primarily to property and casualty insurers in the Gulf Coast region of the United States. Through Oxbridge Re's licensed reinsurance subsidiaries, Oxbridge Reinsurance Limited and Oxbridge RE NS, it writes fully collateralized policies to cover property losses from specified catastrophes. Oxbridge Re specializes in underwriting medium frequency, high severity risks, where it believes sufficient data exists to analyze effectively the risk/return profile of reinsurance contracts. The company's ordinary shares and warrants trade on the NASDAQ Capital Market under the symbols "OXBR" and "OXBRW," respectively. The company's ordinary shares are included in the Russell Microcap Index.

Forward-Looking Statements

This press release may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "estimate," "expect," "intend," "plan," "project" 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. Some of these risks and uncertainties are identified in the Company's filings with the SEC. The occurrence of any of these risks and uncertainties could have a material adverse effect on the Company's business, financial condition and results of operations. Any forward-looking statements made in this press release speak only as of the date of this press release and, except as required by law, the Company undertakes no obligation to update any forward-looking statement contained in this press release, even if the Company's expectations or any related events, conditions or circumstances change.


OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheets
(expressed in thousands of U.S. Dollars, except per share and share amounts)


At September 30, 2018 At December 31, 2017
(Unaudited)
Assets
Investments:
Fixed-maturity securities, available for sale, at fair value (amortized cost: $4,784 and $4,450, respectively)
$ 4,764 4,433
Equity securities, available for sale, at fair value (cost of $2,058 in 2017)
- 2,036
Equity securities, at fair value (cost of $5 in 2018)
5 -
Total investments
4,769 6,469
Cash and cash equivalents
8,238 7,763
Restricted cash and cash equivalents
3,910 3,124
Accrued interest and dividend receivable
36 39
Premiums receivable
2,080 3,798
Deferred policy acquisition costs
191 48
Prepayment and other assets
71 116
Property and equipment, net
22 36
Total assets
$ 19,317 21,393
Liabilities and Shareholders' Equity
Liabilities:
Reserve for losses and loss adjustment expenses
$ 167 4,836
Loss experience refund payable
- 135
Losses payable
- 386
Notes payable to Series 2018-1 noteholders
2,000 -
Unearned premiums reserve
1,740 2,012
Accounts payable and other liabilities
695 106
Total liabilities
4,602 7,475
Shareholders' equity:
Ordinary share capital, (par value $0.001, 50,000,000 shares authorized; 5,733,587 shares issued and outstanding)
6 6
Additional paid-in capital
32,194 32,100
Accumulated Deficit
(17,465 ) (18,149 )
Accumulated other comprehensive loss
(20 ) (39 )
Total shareholders' equity
14,715 13,918
Total liabilities and shareholders' equity
$ 19,317 21,393


OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statements of Income (unaudited)
(expressed in thousands of U.S. Dollars, except per share and share amounts)


Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Revenue
Assumed premiums
$ 47 - 2,627 18,256
Premiums ceded
- (733 ) - (880 )
Change in loss experience refund payable
- 2,730 (225 ) 1,470
Change in unearned premiums reserve
653 17,309 (1,148 ) 4,494
Net premiums earned
700 19,306 1,254 23,340
Net income from derivative instruments
397 - 773 -
Net investment and other income
100 128 280 341
Net realized investment losses
(61 ) (104 ) (237 ) (56 )
Change in fair value of equity securities
118 - 22 -
Total revenue
1,254 19,330 2,092 23,625
Expenses
Losses and loss adjustment expenses
- 41,400 - 42,427
Net loss on commutation
- - 8 -
Policy acquisition costs and underwriting expenses
63 514 101 672
General and administrative expenses
305 370 981 1,094
Total expenses
368 42,284 1,090 44,193
Income (loss) before (income) attributable to Series 2018-1 noteholders
(Income) attributable to Series 2018-1 noteholders
(234 ) - (296 ) -
Net income (loss)
652 (22,954 ) 706 (20,568 )
Earnings (loss) per share
Basic and Diluted
$ 0.11 (3.97 ) 0.12 (3.53 )
Dividends paid per share
$ - 0.12 - 0.36
Performance ratios to net premiums earned:
Loss ratio
0.0 % 214.4 % 0.0 % 181.8 %
Acquisition cost ratio
9.0 % 2.7 % 8.1 % 2.9 %
Expense ratio
33.5 % 4.6 % 53.8 % 7.6 %
Combined ratio
33.5 % 219.0 % 53.8 % 189.3 %


SOURCE: Oxbridge Re Holdings Limited