OXBRIDGE RE HOLDINGS Ltd

Previous wording

The following is a discussion and analysis of our results of operations for the three and six-month periods ended June 30, 2024 and 2023 and our financial condition as of June 30, 2024 and December 31, 2023. The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and in our Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 26, 2024. References to “we,” “us,” “our,” “our company,” or “the Company” refer to Oxbridge Re Holdings Limited and its wholly-owned subsidiaries, Oxbridge Reinsurance Limited and Oxbridge Re NS, unless the context dictates otherwise.

Current wording

The following is a discussion and analysis of our results of operations for the three and nine-month periods ended September 30, 2024 and 2023 and our financial condition as of September 30, 2024 and December 31, 2023. The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and in our Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 26, 2024. References to “we,” “us,” “our,” “our company,” or “the Company” refer to Oxbridge Re Holdings Limited and its subsidiaries, Oxbridge Reinsurance Limited, SurancePlus Holdings Ltd., SurancePlus Inc. and Oxbridge Re NS, unless the context dictates otherwise.

Previous wording

In addition to our historical reinsurance business operations, in 2023, our new subsidiary SurancePlus developing, offering, and selling a tokenized reinsurance security representing fractionalized interests in reinsurance contracts, with each token representing an interest in participating notes issued by Oxbridge Re NS. These efforts culminated in the development, launch, and issuance of our first tokenized reinsurance security, the DeltaCat Re Token, which we believe is the first “on-chain” reinsurance security of its kind to be developed by a subsidiary of a public company. Following the issuance of the DeltaCat Re Token, we intend to develop, launch, and issue additional series of tokenized reinsurance securities representing fractional interests in reinsurance contracts, and we are also using our tokenization experience and activities as a foundation for developing Web3-focused business offerings and products relating to the tokenization of other real-world assets (RWAs), including RWAs held or being acquired by third parties. Our tokenization business will be conducted through SurancePlus and through other subsidiaries of our wholly owned subsidiary, SurancePlus Holdings Ltd. (“SurancePlus Holdings”), [a Cayman Islands exempted company] that we have organized to serve as a holding company for subsidiaries that will operate our developing Web3-focused business operations.

Current wording

In addition to our historical reinsurance business operations, in 2023, our new subsidiary SurancePlus developing, offering, and selling a tokenized reinsurance security representing fractionalized interests in reinsurance contracts, with each token representing an interest in participating notes issued by Oxbridge Re NS. These efforts culminated in the development, launch, and issuance of our first tokenized reinsurance security, the DeltaCat Re Token, which we believe is the first “on-chain” reinsurance security of its kind to be developed by a subsidiary of a public company. Following the issuance of the DeltaCat Re Token, we intend to develop, launch, and issue additional series of tokenized reinsurance securities representing fractional interests in reinsurance contracts, and we are also using our tokenization experience and activities as a foundation for developing Web3-focused business offerings and products relating to the tokenization of other real-world assets (RWAs), including RWAs held or being acquired by third parties. Our tokenization business will be conducted through SurancePlus and through other subsidiaries of our 80% owned subsidiary, SurancePlus Holdings Ltd. (“SurancePlus Holdings”), a Cayman Islands exempted company that we have organized to serve as a holding company for subsidiaries that will operate our developing Web3-focused business operations.

Previous wording

SurancePlus, an indirect wholly-owned subsidiary of the Company, was incorporated as a British Virgin Islands Business Company on December 19, 2022 for the purpose of tokenizing reinsurance contracts underwritten by its affiliated licensed reinsurer, Oxbridge Re NS.

Current wording

SurancePlus, an indirect 80% owned subsidiary of the Company, was incorporated as a British Virgin Islands Business Company on December 19, 2022 for the purpose of tokenizing reinsurance contracts underwritten by its affiliated licensed reinsurer, Oxbridge Re NS.

Previous wording

On March 18, 2024, Oxbridge Re Holdings Limited (the “Company”) and its indirect wholly owned subsidiary SurancePlus Inc. (“SurancePlus”), a British Virgin Islands Business Company, announced the commencement of an offering by SurancePlus of Participation Shares (the “Securities”) represented by digital tokens to be issued under a 3-year Participation Share Investment Contract (the “PSIC”). The Participation Shares are not shares in SurancePlus and shall have no preemptive right or conversion rights. The Participation Shares solely confer contractual rights against SurancePlus as contained in the PSIC. At the offering’s commencement, up to one million (1,000,000) Participation Shares were issued, represented by digital tokens labelled “EpsilonCat Re”. The quantity of Participation Shares to be issued in subsequent years of 2025, and 2026, shall be disclosed prior to their issuances. At the start of the offering, the Participation Shares were offered at an initial price of $10.00 per Participation Share.

Current wording

On March 18, 2024, Oxbridge Re Holdings Limited (the “Company”) and its indirect subsidiary SurancePlus Inc. (“SurancePlus”), a British Virgin Islands Business Company, announced the commencement of an offering by SurancePlus of Participation Shares (the “Securities”) represented by digital tokens to be issued under a 3-year Participation Share Investment Contract (the “PSIC”). The Participation Shares are not shares in SurancePlus and shall have no preemptive right or conversion rights. The Participation Shares solely confer contractual rights against SurancePlus as contained in the PSIC. At the offering’s commencement, up to one million (1,000,000) Participation Shares will be issued, represented by digital tokens labelled “EpsilonCat Re”. The quantity of Participation Shares to be issued in subsequent years of 2025, and 2026, shall be disclosed prior to their issuances. At the start of the offering, the Participation Shares will be offered at an initial price of $10.00 per Participation Share.

Previous wording

The net proceeds from the offer and sale of the Participation Shares were used by SurancePlus to purchase one or more participating notes of Oxbridge Re NS, an affiliated Cayman Islands licensed reinsurance entity, and the proceeds from the sale of such participating notes were invested in collateralized reinsurance contracts to be underwritten by Oxbridge Re NS. The holders of the Participation Shares are generally be entitled to proceeds from the payment of the participating notes in the amount of a preferred return equal to the initial Participation Share price, plus 20%, and then 80% of any proceeds in excess of the amount necessary to pay the preferred return.

Current wording

The net proceeds from the offer and sale of the Participation Shares were used by SurancePlus to purchase a participating note of Oxbridge Re NS, an affiliated Cayman Islands licensed reinsurance entity, and the proceeds from the sale of such participating note were invested in collateralized reinsurance contracts to be underwritten by Oxbridge Re NS. The holders of the Participation Shares will generally be entitled to proceeds from the payment of the participating notes in the amount of a preferred return equal to the initial Participation Share price, plus 20%, and then 80% of any proceeds in excess of the amount necessary to pay the preferred return.

Previous wording

On July 11, 2024, SurancePlus Inc. (“SurancePlus”), an indirect wholly owned subsidiary of Oxbridge Re Holdings Limited (“Oxbridge”), completed its private placement (the “Private Placement”) of Participation Shares (the “Securities”) represented by digital tokens issued under a 3-year Participation Share Investment Contract (the “PSIC”). On July 11, 2024, SurancePlus entered into subscription agreements with accredited investors and non-U.S. persons in the Private Placement with respect to 287,705 of the Participation Shares represented by the digital tokens, EpsilonCat Re at a purchase price of $10.00 per Participation Share for aggregate gross proceeds of $2,878,048 which approximately $1,469,000 was received from third-party investors and approximately $1,409,000 from Oxbridge Re Holdings Limited. Approximately $312,000 and $299,000 of management fees were deducted from the gross proceeds from the third-party investors and Oxbridge Re Holdings Limited, respectively, The tokens were issued on the Avalanche blockchain. Ownership of EpsilonCat Re tokenized Participation Shares indirectly confers fractionalized interests in reinsurance contracts underwritten by Oxbridge Re’s reinsurance subsidiary, Oxbridge Re NS, for the 2024-2025 treaty year. The Participation Shares are not shares in SurancePlus and shall have no preemptive right or conversion rights. The Participation Shares solely confer contractual rights against SurancePlus as contained in the PSIC.

Current wording

On July 12, 2024, SurancePlus completed the Private Placement. The aggregate amount raised in the Private Placement was $2,878,078 Participation Shares (the “Securities”) represented by digital tokens issued under a 3-year Participation Share Investment Contract (for the issuance of 287,808 of the Participation Shares represented by the digital tokens, of which approximately $1,469,000 was received from third-party investors and approximately $1,409,000 was received from Oxbridge Re Holdings Limited.

Previous wording

The Company’s wholly-owned licensed reinsurance subsidiary, Oxbridge Reinsurance Limited (“Oxbridge Reinsurance”), is the lead investor in Oxbridge Acquisition’s sponsor and at June 30, 2024, held the equivalent of 1,423,827 of Jet.AI Inc’s common stock (NASDAQ: JTAI) and 3,094,999 of Jet.AI Inc’s warrants (NASDAQ: JTAIW). On July 29, 2024, the Company’s 3,094,999 warrants were converted into 945,211 of Jet.AI’s common stock in accordance with Jet.AI’s Tender Offer Statement (as amended) as filed with the Securities and Exchange Commission on July 23, 2024.

Current wording

The Company’s wholly-owned licensed reinsurance subsidiary, Oxbridge Reinsurance Limited (“Oxbridge Reinsurance”), was the lead investor in Oxbridge Acquisition’s sponsor and holds the equivalent of 2,369,038 of Jet.AI Inc’s common stock (NASDAQ: JTAI).

Previous wording

The Ordinary Shares were registered pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-262590) (the “Registration Statement”), and offerings of the Ordinary Shares will be made only by means of a prospectus supplement.

Current wording

The Ordinary Shares were registered pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-262590) (the “Registration Statement”), and offerings of the Ordinary Shares were made only by means of a prospectus supplement.

Previous wording

As of June 30, 2024, we have sold 29,918 shares of our common stock under the ATM program for gross proceeds of $77,000. After deducting commissions related to the ATM offering of $2,000, the net proceeds we received from the transactions were $75,000. The proceeds from the ATM sales are being used for general corporate purposes.

Current wording

During the nine months ended September 30, 2024, we sold 143,895 ordinary shares under the ATM program for gross proceeds of $419,663 at an average price of $2.92 per share. After deducting commissions related to the ATM offering of $12,590, the net proceeds we received from the transactions were $407,073. The proceeds from the ATM sales are being used for working capital and other general corporate purposes.

Previous wording

During the six-month period ended June 30, 2024, the Company’s subsidiary, SurancePlus Inc., entered into subscriptions agreements for the sale of its participation Shares represented by the digital, representing fractionalized interest in reinsurance contracts underwritten by Oxbridge Re NS. The tokens were issued on the Avalanche blockchain.

Current wording

During the nine-month period ended September 30, 2024, the Company’s subsidiary, SurancePlus Inc., entered into subscriptions agreements for the sale of its participation Shares represented by the digital, representing fractionalized interest in reinsurance contracts underwritten by Oxbridge Re NS. The tokens were issued on the Avalanche blockchain.

Previous wording

The following is our consolidated statement of operations and performance ratios for the three and six-month periods ended June 30, 2024 and 2023 (dollars in thousands, except per share amounts):

Current wording

The following is our consolidated statement of operations and performance ratios for the three and nine-month periods ended September 30, 2024 and 2023 (dollars in thousands, except per share amounts):

Previous wording

General. Net loss for the quarter ended June 30, 2024 was $821,000, or ($0.14) basic and diluted earnings per share compared to a net loss of $85,000, or ($0.01) basic and diluted loss per share, for the quarter ended June 30, 2023. The increase in net loss is primarily due to the negative change in the fair value of equity securities and investments during the quarter ended June 30, 2024 when compared with the prior period.

Current wording

General. Net loss for the quarter ended September 30, 2024 was $540,000, or ($0.09) basic and diluted earnings per share compared to a net loss of $7.3 million, or ($1.24) basic and diluted loss per share, for the quarter ended September 30, 2023. The change is primarily due to the decrease in the negative change in the fair value of equity securities and investments during the quarter ended September 30, 2024 when compared with the prior period.

Previous wording

Net loss for the six months ended June 30, 2024 was $1.73 million or $0.29 per basic or diluted earnings per share compared to a net income of $57,000, or $0.01 per basic and diluted income per share, for the six months ended June 2023. The increase in net loss was the result of the negative change in the fair value of equity securities and investments which outweighed the revenue driven by increase in SurancePlus management fee income, during the six months ended June 30, 2024 when compared with the prior period.

Current wording

Net loss for the nine months ended September 30, 2024 was $2.27 million or ($0.37) per basic or diluted loss per share compared to a net loss of $7.24 million, or ($1.23) per basic and diluted loss per share, for the nine months ended September 2023. The decrease in net loss was primarily the result of the decrease in the change of fair value of equity securities and investments during the nine months ended September 30, 2024 when compared with the prior period.

Previous wording

Net premiums earned for the quarter ended June 30, 2024 increased to $564,000 from $183,000 for the quarter ended June 30, 2023. This increase is attributed to the prior period recognizing only one month of premiums due to the acceleration of premiums on contracts in force during the quarter ended June 30, 2023. In contrast, the current year accounted for a full quarter of premiums.

Current wording

Net premiums earned for the quarter ended September 30, 2024 increased to $595,000 from $549,000 for the quarter ended September 30, 2023. The increase is due to the contracts in force in the quarter ended September 30, 2024.

Previous wording

Net premiums earned for the six months ended June 30, 2024, increased to $1.1 million from $183,000 for the same period in 2023. This increase is primarily due to the prior year recognizing only one month of premiums because of premium acceleration on the reinsurance contracts in force. In contrast, the six months ended June 30, 2024, recognized a full six months of premiums.

Current wording

Net premiums earned for the nine months ended September 30, 2024 increased to $1.7 million from $732,000 for the nine months ended September 30, 2023. The increase is due to the reinsurance contracts in force during the quarter ended September 30, 2024, when compared to the prior period.

Previous wording

Losses Incurred. There were no losses incurred during the six-month periods ending June 30, 2024 and 2023.

Current wording

Losses Incurred. There were no losses incurred during the nine-month periods ending September 30, 2024 and 2023.

Previous wording

Policy Acquisition Costs and Underwriting Expenses. Acquisition costs represent the amortization of the brokerage fees and federal excise taxes incurred on reinsurance contracts placed. Policy acquisition costs and underwriting expenses for the quarter ended June 30, 2024 increased to $62,000 from $20,000 for the quarter ended June 30, 2023.

Current wording

Policy Acquisition Costs and Underwriting Expenses. Acquisition costs represent the amortization of the brokerage fees and federal excise taxes incurred on reinsurance contracts placed. Policy acquisition costs and underwriting expenses for the quarter ended September 30, 2024 increased to $66,000 from $60,000 for the quarter ended September 30, 2023. The increase is due to the contracts in force in the quarter ended September 30, 2024.

Previous wording

General and Administrative Expenses. General and administrative expenses for the quarter ended June 30, 2024 decreased to $ 566,000, from $677,000 for the quarter ended June 30, 2023. The decrease is due to the decrease in offering costs associated with SurancePlus being recognized during the three-month period ending June 30, 2024 when compared with the same period last year.

Current wording

General and Administrative Expenses. General and administrative expenses for the quarter ended September 30, 2024 decreased to $ 432,000, from $628,000 for the quarter ended September 30, 2023. The decrease is due to the decrease in offering costs associated with SurancePlus being recognized during the three-month period ending September 30, 2024 when compared with the same period last year.

Previous wording

General and administrative expenses for the six months ended June 30, 2024 decreased to $1.05 million, from $1.1 million, for the quarter ended June 30, 2023. The decrease is due to expense fluctuations along with the decrease in offering costs associated with SurancePlus being recognized during the six-month period ending June 30, 2024 when compared to the prior period.

Current wording

General and administrative expenses for the nine months ended September 30, 2024 decreased to $1.5 million, from $1.7 million, for the quarter ended September 30, 2023. The decrease is primarily due to the decrease in offering costs associated with SurancePlus being recognized during the nine-month period ending September 30, 2024 when compared to the prior period.

Previous wording

***Loss Ratio.***The loss ratio is the ratio of losses and loss adjustment expenses incurred to premiums earned and measures the underwriting profitability of our reinsurance business. The loss ratio remained consistent at 0% for the quarter end June 30, 2024 compared with the quarter ended June 30, 2023.

Current wording

***Loss Ratio.***The loss ratio is the ratio of losses and loss adjustment expenses incurred to premiums earned and measures the underwriting profitability of our reinsurance business. The loss ratio remained consistent at 0% for the quarter and nine-month period ended September 30, 2024, compared with the quarter and nine-month period ended September 30, 2023.

Previous wording

The acquisition cost ratio increased marginally to 11.0% for the six-month period ended June 30, 2024, from 10.9% for the six-month period ended June 30, 2023. The increase is primarily to premiums being earned during the period ending June 30, 2024, when compared with the prior period.

Current wording

The acquisition cost ratio increased marginally to 11.1% for the three-month period ended September 30, 2024 and 11.0% for the nine-month period ended September 30, 2024, from 10.9% for the three and nine-month period ended September 30, 2023. The increase is primarily to premiums being earned during the periods ending September 30, 2024, when compared with the prior periods.

Previous wording

***Expense Ratio.***The expense ratio is the ratio of policy acquisition costs, other underwriting expenses and general and administrative expenses to net premiums earned. We use the expense ratio to measure our operating performance. The expense ratio decreased from 601.6% for the six-month period ended June 30, 2023 to 105.7% for the six-month period ended June 30, 2024. The improvement is due to the higher levels of premium earned during the six-month period ended June 30, 2024, when compared with the prior period.

Current wording

***Expense Ratio.***The expense ratio is the ratio of policy acquisition costs, other underwriting expenses and general and administrative expenses to net premiums earned. We use the expense ratio to measure our operating performance. The expense ratio decreased from 125.3% for the three-month period ended September 30, 2023, to 83.7% for the three-month period ended September 30, 2024. The decrease is due to the higher levels of premium earned and lower general administrative expenses incurred during the three-month period ended September 30, 2024, when compared with the prior period.

Previous wording

***Combined Ratio.***We use the combined ratio to measure our underwriting performance. The combined ratio is the sum of the loss ratio and the expense ratio. The combined ratio decreased from 601.6% for the six-month period ended June 30, 2023 to 105.7% for the six-month period ended June 30, 2024. The improvement is due to the higher levels of premium earned during the six-month period ended June 30, 2024, when compared with the prior period.

Current wording

***Combined Ratio.***We use the combined ratio to measure our underwriting performance. The combined ratio is the sum of the loss ratio and the expense ratio. The combined ratio decreased from 125.3% for the three-month period ended September 30, 2023, to 83.7% for the three-month period ended September 30, 2024. The decrease is due to the higher levels of premium earned and lower general administrative expenses incurred during the nine-month period ended September 30, 2024, when compared with the prior period.

Previous wording

**Cash and Cash Equivalents and Restricted Cash and Cash Equivalents.**As of June 30, 2024, our restricted cash and cash equivalents increased by $240,000, or 6.40%, to $3.99 million, from $3.75 million as of December 31, 2023. The increase is the result of premium deposits made during the six months ended June 30, 2024.

Current wording

**Cash and Cash Equivalents and Restricted Cash and Cash Equivalents.**As of September 30, 2024, our restricted cash and cash equivalents increased by $1.1 million, or 28.9%, to $4.8 million, from $3.7 million as of December 31, 2023. The increase is the result of premium deposits made during the nine months ended September 30, 2024.

Previous wording

**Investments.**As of June 30, 2024, our total investments decreased by $467,000 or 69% to $213,000, from $680,000 as of December 31, 2023. The decrease is primarily a result of the sale of two of the equity securities and the decrease in value of the equity securities during the six-month period ended June 30, 2024.

Current wording

**Investments.**As of September 30, 2024, our total investments decreased by $495,000 to $185,000, from $680,000 as of December 31, 2023. The decrease is primarily a result of the sale of two of the equity securities and the decrease in value of the equity securities during the nine-month period ended September 30, 2024.

Previous wording

Other investments. As of June, 30, 2024, our other investments decreased $1.5 million to $965,000 from $2.48 million at December 31, 2023. The decrease is due to fair value changes of our investment in Jet.AI in which the Company has an equity investment measured at fair value.

Current wording

Other investments. As of September, 30, 2024, our other investments decreased $1.94 million to $541,000 from $2.48 million at December 31, 2023. The decrease is due to fair value changes of our investment in Jet.AI in which the Company has an equity investment measured at fair value.

Previous wording

Other liabilities – Cat Re Tokenholders. As of June 30, 2024, amounts due to Cat Re tokenholders decreased by $284,000 from $1.52 million at December 31, 2023. The decrease is due to returns made to investors who invested in Delta Cat Re tokens outweighing the proceeds from third-party investors purchasing the Epsilon Cat Re participation shares represented by digital tokens (net of management fees), plus one month underwriting-relating income that is attributable to third-party tokenholders.

Current wording

Other liabilities – Delta Cat Re Tokenholders. As of September 30, 2024, amounts due to Epsilon Cat Re tokenholders decreased by $38,000 to $1.48 million from $1.52 million at December 31, 2023. The decrease is due to returns made to investors who invested in Delta Cat Re tokens outweighing the proceeds from third-party investors purchasing the Epsilon Cat Re participation shares represented by digital tokens (net of management fees), plus four month underwriting-relating income that is attributable to third-party tokenholders.

Previous wording

***Unearned Premium Reserve.***As of June 30, 2024, our unearned premium reserve increased by $1.3 million to $2,181,000 from $915,000 at December 31, 2023. The increase is due to reinsurance contracts placed for the 2024 2025 treaty year.

Current wording

***Unearned Premium Reserve.***As of September 30, 2024, our unearned premium reserve increased by $671,000 to $1,586,000 from $915,000 at December 31, 2023. The increase is due to reinsurance contracts placed for the 2024 2025 treaty year.

Previous wording

Our cash flows from operating, investing, and financing activities for the six-month periods ended June 30, 2024 and 2023 are summarized below.

Current wording

Our cash flows from operating, investing, and financing activities for the nine-month periods ended September 30, 2024 and 2023 are summarized below.

Previous wording

Cash Flows for the Six months ended June 30, 2024 (in thousands*)*

Current wording

Cash Flows for the Nine months ended September 30, 2024 (in thousands)

Previous wording

Net cash used in operating activities for the six months ended June 30, 2024 totaled $1,752, which consisted primarily of cash received net written premiums less cash disbursed for operating expenses. Net cash provided by investing activities of $448 which was due to the repayment of the note receivable by Jet.AI and the proceeds from the sale of two of our equity securities. Net cash provided by financing activities was $1,544 which consisted primarily of net proceeds from Epsilon Cat Re participation shares represented by digital tokens offset by the payments made to DeltaCat Re tokenholders.

Current wording

Net cash used in operating activities for the nine months ended September 30, 2024 totaled $1,248 which consisted primarily of cash received net written premiums less cash disbursed for operating expenses. Net cash provided by investing activities of $448 which was due to the repayment of the note receivable by Jet.AI and the proceeds from the sale of two of our equity securities. Net cash provided by financing activities was $1,876 which consisted primarily of net proceeds from Epsilon Cat Re participation shares represented by digital tokens offset by the payments made to DeltaCat Re tokenholders.

Previous wording

Cash Flows for the Six months ended June 30, 2023 (in thousands)

Current wording

Cash Flows for the Nine months ended September 30, 2023 (in thousands)

Previous wording

Net cash used in operating activities for the six-months ended June 30, 2023 totaled $1,614, which consisted primarily of cash received net written premiums less cash disbursed for operating expenses. Net cash used in investing activities of $5 Net cash provided by financing activities was $1,180 which consisted primarily of net proceeds from Delta Cat Re Tokens offset by the payment made to noteholders.

Current wording

Net cash used in operating activities for the nine-months ended September 30, 2023 totaled $1,356, which consisted primarily of cash received net written premiums less cash disbursed for operating expenses. Net cash used in investing activities of $105 which was due mainly to investment in note receivable from Jet.AI Net cash provided by financing activities was $1,182 which consisted primarily of net proceeds from Delta Cat Re Tokens offset by the payment made to noteholders.