Oxbridge Re Holdings Profile
Oxbridge Re Holdings Limited operates as a Cayman Islands specialty property and casualty reinsurer that provides reinsurance solutions through the company’s reinsurance subsidiaries, Oxbridge Reinsurance Limited and Oxbridge Re NS.
The company focuses on underwriting fully collateralized reinsurance contracts primarily for property and casualty insurance companies in the Gulf Coast region of the United States, with an emphasis on Florida. The company specializes in underwriting medium frequency, high severity risks, where sufficient data exists to analyze effectively the risk/return profile of reinsurance contracts. Oxbridge Re NS functions as a reinsurance sidecar which increases the underwriting capacity of Oxbridge Reinsurance Limited. Oxbridge Re NS issues participating notes to third party investors, the proceeds of which are utilized to collateralize Oxbridge Reinsurance Limited’s reinsurance obligations.
The company underwrites reinsurance contracts on a selective and opportunistic basis as opportunities arise based on the company’s intention of achieving favorable long-term returns on equity for the company’s shareholders.
The company’s underwriting business focus is on fully collateralized reinsurance contracts for property catastrophes, primarily in the Gulf Coast region of the United States. Within that market and risk category, the company attempts to select the most economically attractive opportunities across a variety of property and casualty insurers.
Business Strategy
The principal elements of the company’s business strategy are to maintain a commitment to disciplined underwriting; focus on risk management; and take advantage of market opportunities.
Reinsurance Contracts and Products
The company writes primarily property catastrophe reinsurance. The company expects that substantially all of the reinsurance products the company writes in the foreseeable future will be in the form of treaty reinsurance contracts. When the company writes treaty reinsurance contracts, the company does not evaluate separately each of the individual risks assumed under the contracts and are therefore largely dependent on the individual underwriting decisions made by the cedant. Accordingly, as part of the company’s initial review and renewal process, the company carefully reviews and analyzes the cedant’s risk management and underwriting practices in evaluating whether to provide treaty reinsurance and in appropriately pricing the treaty.
The company’s portfolio of business continues to be characterized by relatively large transactions with a relatively few number of cedants. The company anticipates that its business will continue to be characterized by a relatively small number of reinsurance contracts for the foreseeable future.
The company’s contracts are written on an excess-of-loss basis, generally with a per-event cap. The company generally receives the premium for the risk assumed and indemnify the cedant against all or a specified portion of losses and expenses in excess of a specified dollar or percentage amount. The company’s contracts are generally both single-year or multi-year contracts and the company’s policy years generally commence on June 1 of each year and end on May 31 of the following year.
The bulk of the company’s portfolio of risks is assumed pursuant to traditional reinsurance contracts. However, from time to time the company takes underwriting risk by purchasing a catastrophe-linked bond, or via a transaction booked as an industry loss warranty or an indemnity swap. An indemnity swap is an agreement which provides for the exchange between two parties of different portfolios of catastrophe exposure with similar expected loss characteristics (for example, the U.S. earthquake exposure for Asian earthquake exposure).
The company’s most attractive near-term opportunity is in property catastrophe reinsurance coverage for insurance companies. In addition to seeking profitable pricing, the company manages its risks with contractual limits on the company’s exposure. Property catastrophe reinsurance contracts are typically ‘all risk’ in nature, meaning that they protect against losses from earthquakes and hurricanes, as well as other natural and man-made catastrophes such as tornados, fires, winter storms, and floods (where the contract specifically provides for such coverage). Losses on these contracts typically stem from direct property damage and business interruption. The company generally writes property catastrophe reinsurance on an excess-of-loss basis. These contracts typically cover only specific regions or geographical areas.
The company is not licensed or admitted as an insurer in any jurisdiction other than the Cayman Islands. In addition, the company does not have a financial rating and does not expect to have one in the near future. Many jurisdictions, such as the United States do not permit clients to take credit for reinsurance on their statutory financial statements if such reinsurance is obtained from unlicensed or non-admitted insurers without appropriate collateral. As a result, the company anticipates that all of its clients will require the company to fully collateralize the reinsurance contracts the company binds with them. Each of the company’s contracts are fully collateralized and separately structured, with the company’s liability being limited to the value of the assets held in the trust. The company is generally not required to top-up the value of the assets held as collateral in respect of a particular reinsurance agreement, unless such collateral is subject to market risk. For each reinsurance agreement, a reinsurance trust is established in favor of the cedant, and the trustee of the reinsurance trust is a large bank that is agreed upon by the company’s company and the cedant.
Underwriting and Retrocessional Coverage
Most of the company’s reinsurance contracts have other reinsurers participating as lead underwriters, and these lead underwriters generally set the premium for the risk.
Marketing and Distribution
The company expects that, in the future, the majority of the company’s business will be sourced through reinsurance brokers. Brokerage distribution channels provide the company with access to an efficient, variable distribution system without the significant time and expense that would be incurred in creating an in-house marketing and distribution network. Reinsurance brokers receive a brokerage commission that is usually a percentage of gross premiums written.
The company intends to build relationships with global reinsurance brokers and captive insurance companies located in the Cayman Islands.
Regulation
The company’s wholly-owned subsidiaries, Oxbridge Reinsurance Limited and Oxbridge Re NS, each holds a Class C Insurer’s License issued in accordance with the terms of the Insurance Law (as revised) of the Cayman Islands (the ‘Law’), and is subject to regulation by the Cayman Islands Monetary Authority (‘CIMA’), in terms of the Law. As the holder of a Class C Insurer’s License, Oxbridge Reinsurance Limited and Oxbridge Re NS are permitted to undertake insurance business approved by CIMA.
Competition
The company’s competitors include Sirius Point Ltd., Blue Capital Reinsurance Holdings Ltd., ACE Ltd., Everest Re, General Re Corporation, Hannover Re Group, Munich Reinsurance Company, Partner Re Ltd., Swiss Reinsurance Company, Transatlantic Reinsurance Company, Berkshire Hathaway, PartnerRe Ltd, Aeolus, and Nephila.
History
Oxbridge Re Holdings Limited was founded in 2013. The company was incorporated in 2013 under the laws of the Cayman Islands.
