OXBRIDGE RE HOLDINGS LIMITED
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(Exact
name of registrant as specified in its charter)
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Cayman
Islands
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98-1150254
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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Suite
201
42
Edward Church Street, Georgetown
P.O.
Box 469
Grand
Cayman, Cayman Islands
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KY1-9006
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (345) 749-7570
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Yes
X
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No
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Yes
X
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No
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Large
accelerated
filer
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Accelerated
filer
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Non-accelerated
filer
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Smaller
reporting
company
X
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Emerging growth
company X
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Yes
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No
X
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Page
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PART II – OTHER INFORMATION
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At March 31,
2019
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At December 31,
2018
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(Unaudited)
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Assets
|
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Investments:
|
|
|
Fixed-maturity
securities, available for sale, at fair value (amortized cost: $0
and $991 respectively)
|
$-
|
993
|
Equity
securities, at fair value (cost: $209 and $210,
respectively)
|
213
|
162
|
Total
investments
|
213
|
1,155
|
Cash
and cash equivalents
|
7,894
|
8,074
|
Restricted
cash and cash equivalents
|
148
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3,225
|
Accrued
interest and dividend receivable
|
8
|
15
|
Operating
lease right-of-use assets
|
155
|
-
|
Prepayment
and other assets
|
125
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74
|
Property
and equipment, net
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16
|
18
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Total assets
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$8,559
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12,561
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Liabilities and Shareholders’ Equity
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Liabilities:
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Reserve for losses and loss adjustment expenses
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$107
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4,108
|
Operating lease liabilities
|
149
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-
|
Accounts payable and other liabilities
|
129
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139
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Total liabilities
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385
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4,247
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Shareholders’
equity:
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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
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32,235
|
32,226
|
Accumulated Deficit
|
(24,067)
|
(23,920)
|
Accumulated other comprehensive
income
|
-
|
2
|
Total shareholders’
equity
|
8,174
|
8,314
|
Total liabilities and
shareholders’ equity
|
$8,559
|
12,561
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Three
Months Ended
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March
31,
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2019
|
2018
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|
|
Revenue
|
|
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|
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|
Net
premiums earned
|
-
|
220
|
Net
income from derivative instruments
|
-
|
168
|
Net
investment income
|
63
|
72
|
Net
realized investment gains (losses)
|
3
|
(173)
|
Change
in fair value of equity securities
|
51
|
(172)
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|
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|
Total
revenue
|
117
|
115
|
|
|
|
Expenses
|
|
|
Losses and loss adjustment expenses
|
-
|
-
|
Policy acquisition costs and underwriting expenses
|
-
|
8
|
General and administrative expenses
|
264
|
318
|
|
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|
Total
expenses
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264
|
326
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Net
loss
|
(147)
|
(211)
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Loss per share
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Basic
and Diluted
|
(0.03)
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(0.04)
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Weighted-average shares outstanding
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Basic
and Diluted
|
5,733,587
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5,733,587
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Dividends paid per share
|
-
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-
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Three
Months Ended
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March
31,
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2019
|
2018
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Net
loss
|
(147)
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(211)
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Other
comprehensive loss:
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Change
in unrealized loss on investments:
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Unrealized
gain (loss) arising during the period
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1
|
(176)
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Reclassification
adjustment for net realized (gains) losses included in net
loss
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(3)
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173
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Net
change in unrealized loss
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(2)
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(3)
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Total
other comprehensive loss
|
(2)
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(3)
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Comprehensive
loss
|
(149)
|
(214)
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Three Months Ended
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March
31,
|
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2019
|
2018
|
Operating activities
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Net loss
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$(147)
|
(211)
|
Adjustments to reconcile net loss to net cash provided by operating
activities:
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Stock-based compensation
|
9
|
31
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Net amortization of premiums on investments in
fixed-maturity securities
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-
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7
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Depreciation and amortization
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2
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6
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Net realized investment losses
(gains)
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(3)
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173
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Change
in fair value of equity securities
|
(51)
|
172
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Change
in operating assets and liabilities:
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Accrued interest and dividend
receivable
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7
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8
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Premiums
receivable
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-
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216
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Deferred policy acquisition
costs
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-
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8
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Operating lease right-of-use assets
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(6)
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-
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Prepayment and other
receivables
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(51)
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(11)
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Reserve for losses and loss
adjustment expenses
|
(4,001)
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(682)
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Loss experience refund
payable
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-
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135
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Losses payable
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-
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(10)
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Unearned premiums
reserve
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-
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(355)
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Accounts payable and other
liabilities
|
(10)
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832
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Net
cash (used in)/provided by operating activities
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$(4,251)
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319
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Investing activities
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Purchase
of fixed-maturity securities
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-
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(2,973)
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Purchase
of equity securities
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-
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(5,804)
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Proceeds
from sale of fixed-maturity and equity securities
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994
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9,033
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Net
cash provided by investing activities
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$994
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256
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Financing activities
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Repurchases
of common stock under share repurchase plan
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-
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-
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Dividends
paid
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-
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-
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Net
cash used in financing activities
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$-
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-
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(continued)
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Three Months Ended
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March
31,
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2019
|
2018
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Cash
and cash equivalents, and restricted cash and cash
equivalents:
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Net change during the period
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(3,257)
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575
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Balance at beginning of period
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11,299
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10,887
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Balance at end of period
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$8,042
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11,462
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Supplemental disclosure of cash flow
information
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Interest paid
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-
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-
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Income taxes paid
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-
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-
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Non-cash transaction activities
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Net change in unrealized loss on securities available for
sale
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(2)
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(3)
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Operating lease right-of-use assets
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(155)
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-
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Operating lease liabilities
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149
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-
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Ordinary
Share Capital
Shares
|
Amount
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Additional
Paid-in
Capital
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Accumulated
Deficit
|
Accumulated
Other
Comprehensive
Loss
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Total
Shareholders'
Equity
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|
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Balance
at December 31, 2017
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5,733,587
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6
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32,100
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(18,149)
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(39)
|
13,918
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Cumulative
effect of change in accounting for equity securities as of January
1, 2018
|
-
|
-
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-
|
(22)
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22
|
-
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Net
loss for the period
|
-
|
-
|
-
|
(211)
|
-
|
(211)
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Stock-based
compensation
|
-
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-
|
31
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-
|
-
|
31
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Total
other comprehensive loss
|
-
|
-
|
-
|
-
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(3)
|
(3)
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Balance
at March 31, 2018
|
5,733,587
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6
|
32,131
|
(18,382)
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(20)
|
13,735
|
|
|
|
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Balance
at December 31, 2018
|
5,733,587
|
6
|
32,226
|
(23,920)
|
2
|
8,314
|
Net
loss for the period
|
-
|
-
|
-
|
(147)
|
-
|
(147)
|
Stock-based
compensation
|
-
|
-
|
9
|
-
|
-
|
9
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Total
other comprehensive loss
|
-
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-
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-
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-
|
(2)
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(2)
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Balance
at March 31, 2019
|
5,733,587
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6
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32,235
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(24,067)
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-
|
8,174
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Level
1
|
Inputs
that reflect unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the ability to
access at the measurement date;
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Level
2
|
Inputs
other than quoted prices that are observable for the asset or
liability either directly or indirectly, including inputs in
markets that are not considered to be active; and
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Level
3
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Inputs
that are unobservable.
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|
At March
31,
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At
December 31,
|
|
2019
|
2018
|
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(in thousands)
|
|
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Cash
on deposit
|
3,681
|
$3,965
|
Cash
held with custodians
|
4,213
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4,109
|
Restricted
cash held in trust
|
148
|
3,225
|
|
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Total
|
8,042
|
11,299
|
|
|
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|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Loss
|
Estimated
Fair
Value
|
As of December 31,
2018
|
($ in
thousands)
|
|||
Fixed-maturity securities
|
|
|
|
|
U.S.
Treasury and agency securities
|
$991
|
$2
|
$-
|
$993
|
|
|
|
|
|
|
|
|
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|
Total
fixed-maturity securities
|
991
|
2
|
-
|
993
|
|
|
|
|
|
|
|
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Total
available for sale securities
|
$991
|
$2
|
$-
|
$993
|
|
Gross
proceeds from
sales
|
Gross
Realized
Gains
|
Gross
Realized Losses
|
|
($ in
thousands)
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||
|
|
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|
Three Months Ended March
31, 2019
|
|
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|
Available-for-sale
fixed-maturity securities
|
$994
|
$3
|
$-
|
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|
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|
Equity
securities
|
$-
|
$-
|
$-
|
|
|
|
|
Three Months Ended March
31, 2018
|
|
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|
Available-for-sale
fixed-maturity securities
|
$3,000
|
$3
|
$-
|
|
|
|
|
Equity
securities
|
$6,033
|
$418
|
$(594)
|
|
Fair
Value Measurements Using
|
|||
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
Total
|
As of March 31,
2019
|
($ in
thousands)
|
|||
Financial
Assets:
|
|
|
|
|
Cash and cash equivalents
|
$7,894
|
$-
|
$-
|
$7,894
|
|
|
|
|
|
Restricted cash and cash equivalents
|
$148
|
$-
|
$-
|
$148
|
|
|
|
|
|
All
other common stocks
|
213
|
-
|
-
|
213
|
|
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|
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|
Total
equity securities
|
213
|
-
|
-
|
213
|
|
|
|
|
|
Total
securities
|
213
|
-
|
-
|
213
|
|
|
|
|
|
Total
|
$8,255
|
$-
|
$-
|
$8,255
|
|
Fair
Value Measurements Using
|
|||
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
Total
|
As of December 31,
2018
|
($ in thousands)
|
|||
Financial
Assets:
|
|
|
|
|
Cash and cash equivalents
|
$8,074
|
$-
|
$-
|
$8,074
|
|
|
|
|
|
Restricted cash and cash equivalents
|
$3,225
|
$-
|
$-
|
$3,225
|
|
|
|
|
|
Fixed-maturity securities:
|
|
|
|
|
U.S.
Treasury and agency securities
|
-
|
993
|
-
|
993
|
|
|
|
|
|
|
|
|
|
|
Total
fixed-maturity securities
|
-
|
993
|
-
|
993
|
|
|
|
|
|
Total
equity securities
|
162
|
-
|
-
|
162
|
|
|
|
|
|
Total
available for sale securities
|
162
|
993
|
-
|
1,155
|
|
|
|
|
|
Total
|
$11,461
|
$993
|
$-
|
$12,454
|
|
At March
31,
|
At March
31,
|
|
2019
|
2018
|
|
(in thousands)
|
|
|
|
|
Balance,
beginning of period
|
4,108
|
$4,836
|
Incurred
related to:
|
|
|
Current
period
|
-
|
-
|
Prior
period
|
-
|
-
|
Total
incurred
|
-
|
-
|
Paid
related to:
|
|
|
Current
period
|
-
|
-
|
Prior
period
|
(4,001)
|
(682)
|
Total
paid
|
(4,001)
|
(682)
|
Balance,
end of period
|
107
|
$4,154
|
|
Three
Months Ended
|
|
|
March
31,
|
|
|
2019
|
2018
|
|
|
|
|
|
|
Numerator:
|
|
|
Net
loss
|
(147)
|
(211)
|
|
|
|
Denominator:
|
|
|
Weighted
average shares - basic
|
5,733,587
|
5,733,587
|
Weighted
average shares - diluted
|
5,733,587
|
5,733,587
|
Loss
per share - basic
|
(0.03)
|
(0.04)
|
Loss
per share - diluted
|
(0.03)
|
(0.04)
|
|
Number
of Options
|
Weighted-
Average
Exercise
Price
|
Weighted-
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at January 1, 2019
|
250,000
|
|
|
|
Granted
|
290,000
|
$2.00
|
|
|
Outstanding at March 31, 2019
|
540,000
|
$3.86
|
8.1 years
|
$-
|
Exercisable at March 31, 2019
|
246,250
|
$5.71
|
6.4 years
|
$-
|
Outstanding at January 1, 2018
|
250,000
|
|
|
|
Granted
|
-
|
|
|
|
Outstanding at March 31, 2018
|
250,000
|
$6.01
|
7.2 years
|
$-
|
Exercisable at March 31, 2018
|
176,875
|
$6.01
|
7.2 years
|
$-
|
|
2019
|
|
|
Expected
dividend yield
|
0%
|
Expected
volatility
|
31%
|
Risk-free
interest rate
|
2.59%
|
Expected
life (in years)
|
10
|
Per
share grant date fair value of options issued
|
$0.36
|
14. LEASES
|
(in thousands)
|
For the Three-Month Period
Ended March
31,
2019
|
Operating Lease Cost (1)
|
$19
|
|
|
Cash
paid for amounts included in the measurement of lease
liabilities
|
|
Operating
cash flows from operating leases
|
$33
|
|
|
(in thousands)
|
At March
31, 2019
|
Operating
lease right-of-use assets
|
$155
|
Operating
lease liabilities
|
$149
|
Weighted-average
remaining lease term - operating leases
|
4.92years
|
Weighted-average
discount rate - operating leases
|
6.5%
|
(in thousands)
|
At March
31, 2019
|
At
December 31, 2019
|
Remainder
of 2019
|
$21
|
$-
|
2020
|
36
|
-
|
2021
|
36
|
-
|
2022
|
37
|
-
|
2023
|
37
|
-
|
Thereafter
|
6
|
-
|
Total
future minimum lease payments
|
$173
|
$-
|
|
|
|
Less
imputed interest
|
(24)
|
N/A
|
Total
operating lease liability
|
$149
|
N/A
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2019
|
2018
|
|
(in
thousands)
|
|
|
|
|
Revenue
|
|
|
Change
in loss experience refund payable
|
$-
|
$(135)
|
Change
in unearned premiums reserve
|
$-
|
$355
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2019
|
2018
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Net
premiums earned
|
-
|
220
|
Net
income from derivative instruments
|
-
|
168
|
Net
investment income
|
63
|
72
|
Net
realized investment gains (losses)
|
3
|
(173)
|
Change
in fair value of equity securities
|
51
|
(172)
|
|
|
|
Total
revenue
|
117
|
115
|
|
|
|
Expenses
|
|
|
Losses and loss adjustment expenses
|
-
|
-
|
Policy acquisition costs and underwriting expenses
|
-
|
8
|
General and administrative expenses
|
264
|
318
|
|
|
|
Total
expenses
|
264
|
326
|
|
|
|
Net
loss
|
$(147)
|
(211)
|
|
|
|
|
|
|
Loss per share
|
|
|
Basic
and Diluted
|
$(0.03)
|
(0.04)
|
|
|
|
Dividends paid per share
|
$-
|
0
|
|
|
|
|
|
|
Performance ratios to net premiums earned:
|
|
|
Loss
ratio
|
0.0%
|
0.0%
|
Acquisition
cost ratio
|
0.0%
|
3.6%
|
Expense
ratio
|
0.0%*
|
84.0%
|
Combined
ratio
|
0.0%*
|
84.0%
|
Exhibit
No.
|
Document
|
|
|
Certifications
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the
Securities Exchange Act of 1934.
|
|
|
|
Certifications
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the
Securities Exchange Act of 1934.
|
|
|
|
Written
Statement of the Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. §1350.
|
|
|
|
101
|
The
following materials from Oxbridge Re Holdings Limited’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2019
are filed herewith, formatted in XBRL (Extensible Business
Reporting Language): (i) the Consolidated Balance Sheets, (ii) the
Consolidated Statements of Operations, (iii) the Consolidated
Statements of Comprehensive Income, (iv) the Consolidated
Statements of Cash Flows, (v) the Consolidated Statements of
Changes in Shareholders’ Equity and (vi) the Notes to
Consolidated Financial Statements.
|
Date:
May 14, 2019
|
By: /s/ JAY
MADHU
|
|
Jay
Madhu
Chief
Executive Officer and President
(Principal
Executive Officer)
|
|
|
Date:
May 14 2019
|
By: /s/ WRENDON
TIMOTHY
|
|
Wrendon
Timothy
Chief
Financial Officer and Secretary
(Principal
Financial Officer and PrincipalAccounting Officer)
|
|
|
|
|
Date: May 14,
2019
|
By:
|
/s/ JAY MADHU
|
|
|
|
Jay
Madhu
|
|
|
|
Chief Executive
Officer and President
(Principal
Executive Officer)
|
|
|
|
|
|
Date: May 14,
2019
|
By:
|
/s/ WRENDON
TIMOTHY
|
|
|
|
Wrendon
Timothy
|
|
|
|
Chief Financial
Officer and Secretary
(Principal
Financial Officer and Principal
Accounting
Officer)
|
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
May 14, 2019 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | OXBR | |
Entity Registrant Name | OXBRIDGE RE HOLDINGS Ltd | |
Entity Central Index Key | 0001584831 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 5,733,587 | |
Entity Ex-Transition Period | false |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Fixed-maturity securities, available for sale, at fair value amortized cost | $ 0 | $ 991 |
Equity securities, at fair value cost | $ 209 | $ 210 |
Ordinary shares, par value | $ 0.001 | $ 0.001 |
Ordinary shares, authorized | 50,000,000 | 50,000,000 |
Ordinary shares, issued | 5,733,587 | 5,733,587 |
Ordinary shares, outstanding | 5,733,587 | 5,733,587 |
Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Revenue | ||
Net premiums earned | $ 0 | $ 220 |
Net income from derivative instruments | 0 | 168 |
Net investment and other income | 63 | 72 |
Net realized investment gains (losses) | 3 | (173) |
Change in fair value of equity securities | 51 | (172) |
Total revenue | 117 | 115 |
Expenses | ||
Losses and loss adjustment expenses | 0 | 0 |
Policy acquisition costs and underwriting expenses | 0 | 8 |
General and administrative expenses | 264 | 318 |
Total expenses | 264 | 326 |
Net income (loss) | $ (147) | $ (211) |
Loss per share Basic and Diluted | $ (0.03) | $ (0.04) |
Weighted-average shares outstanding Basic and Diluted | 5,733,587 | 5,733,587 |
Dividends paid per share | $ 0.00 | $ 0.00 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (147) | $ (211) |
Change in unrealized loss on investments: | ||
Unrealized gain (loss) arising during the period | 1 | (176) |
Reclassification adjustment for net realized (gains) losses included in net loss | (3) | 173 |
Net change in unrealized loss | (2) | (3) |
Total other comprehensive loss | (2) | (3) |
Comprehensive loss | $ (149) | $ (214) |
Organization and Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Organization and Basis of Presentation |
(a) Organization
Oxbridge Re Holdings Limited (the “Company”) was incorporated as an exempted company on April 4, 2013 under the laws of the Cayman Islands. Oxbridge Re Holdings Limited owns 100% of the equity interest in Oxbridge Reinsurance Limited, an exempted entity incorporated on April 23, 2013 under the laws of the Cayman Islands and for which a Class “C” Insurer’s license was granted on April 29, 2013 under the provisions of the Cayman Islands Insurance Law. Oxbridge Re Holdings Limited also owns 100% of the equity interest in Oxbridge Re NS, an entity incorporated as an exempted company on December 22, 2017 under the laws of the Cayman Islands to function as a reinsurance sidecar facility and to increase the underwriting capacity of Oxbridge Reinsurance Limited. The Company, through its subsidiaries (collectively “Oxbridge Re”) provides collateralized reinsurance in the property catastrophe market and invests in various insurance-linked securities. The Company operates as a single business segment through its wholly-owned subsidiaries. The Company’s headquarters and principal executive offices are located at Suite 201, 42 Edward Street, Georgetown, Grand Cayman, Cayman Islands, and have their registered offices at P.O. Box 309, Ugland House, Grand Cayman, Cayman Islands.
The Company’s ordinary shares and warrants are listed on The NASDAQ Capital Market under the symbols “OXBR” and “OXBRW,” respectively.
(b) Basis of Presentation and Consolidation
The accompanying unaudited, consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying interim consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s consolidated financial position as of March 31, 2019 and the consolidated results of operations and cash flows for the periods presented. The consolidated results of operations for interim periods are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ended December 31, 2019. The accompanying unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2018 included in the Company’s Form 10-K, which was filed with the SEC on March 19, 2019.
In preparing the interim unaudited consolidated financial statements, management was required to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the financial reporting date and throughout the periods being reported upon. Certain of the estimates result from judgments that can be subjective and complex and consequently actual results may differ from these estimates, which would be reflected in future periods.
Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the reserve for losses and loss adjustment expenses, which include amounts estimated for claims incurred but not yet reported. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make these estimates. In addition, accounting policies specific to valuation of investments and assessment of other-than-temporary impairment (“OTTI”) involve significant judgments and estimates material to the Company’s consolidated financial statements. Although considerable variability is likely to be inherent in these estimates, management believes that the amounts provided are reasonable. These estimates are continually reviewed and adjusted if necessary. Such adjustments are reflected in current operations.
The Company consolidates in these Consolidated Financial Statements the results of operations and financial position of all voting interest entities (“VOE”) in which the Company has a controlling financial interest and all variable interest entities (“VIE”) in which the Company is considered to be the primary beneficiary. The consolidation assessment, including the determination as to whether an entity qualifies as a VIE or VOE, depends on the facts and circumstances surrounding each entity.
All significant intercompany balances and transactions have been eliminated. |
Significant Accounting Policies |
3 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||
Accounting Policies [Abstract] | |||||||||||
Significant Accounting Policies |
Cash and cash equivalents: Cash and cash equivalents are comprised of cash and short- term investments with original maturities of three months or less.
Restricted cash and cash equivalents: Restricted cash and cash equivalents represent funds held in accordance with the Company’s trust agreements with ceding insurers and trustees, which requires the Company to maintain collateral with a market value greater than or equal to the limit of liability, less unpaid premium.
Investments: The Company’s investments consist of fixed-maturity securities and equity securities, and for which its fixed-maturity securities are classified as available-for-sale. The Company’s available for sale investments are carried at fair value with changes in fair value included as a separate component of accumulated other comprehensive loss in shareholders’ equity. For the Company’s investment in equity securities, the changes in fair value are recorded within the consolidated statements of operations.
Unrealized gains or losses are determined by comparing the fair market value of the securities with their cost or amortized cost. Realized gains and losses on investments are recorded on the trade date and are included in the consolidated statements of operations. The cost of securities sold is based on the specified identification method. Investment income is recognized as earned and discounts or premiums arising from the purchase of debt securities are recognized in investment income using the interest method over the remaining term of the security.
The Company reviews all fixed-maturity securities for other-than-temporary impairment ("OTTI") on a quarterly basis and more frequently when economic or market conditions warrant such review. When the fair value of any investment is lower than its cost, an assessment is made to see whether the decline is temporary of other-than-temporary. If the decline is determined to be other-than-temporary the investment is written down to fair value and an impairment charge is recognized in operations in the period in which the Company makes such determination. For a fixed-maturity security that the Company does not intend to sell nor is it more likely than not that the Company will be required to sell before recovery of its amortized cost, only the credit loss component is recognized in operations, while impairment related to all other factors is recognized in other comprehensive income. The Company considers various factors in determining whether an individual security is other-than-temporarily impaired (see Note 4).
Fair value measurement: GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under GAAP are as follows:
Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. For fixed maturity securities, inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, broker quotes for similar securities and other factors. The fair value of investments in stocks and exchange-traded funds is based on the last traded price. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company’s investment custodians. The investment custodians consider observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant markets. The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument.
Derivative Financial Instruments: The Company may from time to time enter into underwriting contracts such as industry loss warranty contracts (“ILW”) that are treated as derivatives for GAAP purposes. GAAP requires that an entity recognize all derivatives in the consolidated balance sheet at fair value. It also requires that unrealized gains and losses resulting from changes in fair value be included in operations or comprehensive loss. The Company’s derivative financial instrument assets are included in prepayments and other assets. Derivative financial instrument liabilities are included in accounts payable and other liabilities.
Deferred policy acquisition costs (“DAC”): Policy acquisition costs consist of brokerage fees, federal excise taxes and other costs related directly to the successful acquisition of new or renewal insurance contracts and are deferred and amortized over the terms of the reinsurance agreements to which they relate. The Company evaluates the recoverability of DAC by determining if the sum of future earned premiums and anticipated investment income is greater than the expected future claims and expenses. If a loss is probable on the unexpired portion of policies in force, a premium deficiency loss is recognized. At March 31, 2019, the Company had no DAC.
Property and equipment: Property and equipment are recorded at cost when acquired. Property and equipment are comprised of motor vehicles, furniture and fixtures, computer equipment and leasehold improvements and are depreciated, using the straight-line method, over their estimated useful lives, which are five years for furniture and fixtures and computer equipment and four years for motor vehicles. Leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or remaining lease term. The Company periodically reviews property and equipment that have finite lives, and that are not held for sale, for impairment by comparing the carrying value of the assets to their estimated future undiscounted cash flows. For the three month periods ended March 31, 2019 and 2018, there were no impairments in property and equipment.
Allowance for uncollectible receivables: Management evaluates credit quality by evaluating the exposure to individual counterparties; where warranted management also considers the credit rating or financial position, operating results and/or payment history of the counterparty. Management establishes an allowance for amounts for which collection is considered doubtful. Adjustments to previous assessments are recognized as income in the year in which they are determined. At March 31, 2019, no receivables were determined to be overdue or impaired and, accordingly, no allowance for uncollectible receivables has been established.
Reserves for losses and loss adjustment expenses: The Company determines its reserves for losses and loss adjustment expenses on the basis of the claims reported by the Company’s ceding insurers and for losses incurred but not reported (“IBNR”), management uses the assistance of an independent actuary. The reserves for losses and loss adjustment expenses represent management’s best estimate of the ultimate settlement costs of all losses and loss adjustment expenses. Management believes that the amounts are adequate; however, the inherent impossibility of predicting future events with precision, results in uncertainty as to the amount which will ultimately be required for the settlement of losses and loss expenses, and the differences could be material. Adjustments are reflected in the consolidated statements of operations in the period in which they are determined.
Loss experience refund payable: Certain contracts include retrospective provisions that adjust premiums or result in profit commissions in the event losses are minimal or zero. In accordance with GAAP, the Company will recognize a liability in the period in which the absence of loss experience obligates the Company to pay cash or other consideration under the contracts. On the contrary, the Company will derecognize such liability in the period in which a loss experience arises. Such adjustments to the liability, which accrue throughout the contract terms, will reduce the liability should a catastrophic loss event covered by the Company occur.
Premiums assumed: The Company records premiums assumed, net of loss experience refunds, as earned pro-rata over the terms of the reinsurance agreements, or period of risk, where applicable, and the unearned portion at the consolidated balance sheet date is recorded as unearned premiums reserve. A reserve is made for estimated premium deficiencies to the extent that estimated losses and loss adjustment expenses exceed related unearned premiums. Investment income is not considered in determining whether or not a deficiency exists.
Subsequent adjustments of premiums assumed, based on reports of actual premium by the ceding companies, or revisions in estimates of ultimate premium, are recorded in the period in which they are determined. Such adjustments are generally determined after the associated risk periods have expired, in which case the premium adjustments are fully earned when assumed.
Certain contracts allow for reinstatement premiums in the event of a full limit loss prior to the expiration of the contract. A reinstatement premium is not due until there is a full limit loss event and therefore, in accordance with GAAP, the Company records a reinstatement premium as written only in the event that the reinsured incurs a full limit loss on the contract and the contract allows for a reinstatement of coverage upon payment of an additional premium. For catastrophe contracts which contractually require the payment of a reinstatement premium equal to or greater than the original premium upon the occurrence of a full limit loss, the reinstatement premiums are earned over the original contract period. Reinstatement premiums that are contractually calculated on a pro-rata basis of the original premiums are earned over the remaining coverage period.
Unearned Premiums Ceded: The Company reduces the risk of future losses on business assumed by reinsuring certain risks and exposures with other reinsurers (retrocessionaires). The Company remains liable to the extent that any retrocessionaire fails to meet its obligations and to the extent that the Company does not hold sufficient security for their unpaid obligations.
Ceded premiums are written during the period in which the risk incept and are expensed over the contract period in proportion to the period of protection. Unearned premiums ceded consist of the unexpired portion of the reinsurance obtained.
Uncertain income tax positions: The authoritative GAAP guidance on accounting for, and disclosure of, uncertainty in income tax positions requires the Company to determine whether an income tax position of the Company is more likely than not to be sustained upon examination by the relevant tax authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position.
For income tax positions meeting the more likely than not threshold, the tax amount recognized in the consolidated financial statements, if any, is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. The application of this authoritative guidance has had no effect on the Company’s consolidated financial statements because the Company had no uncertain tax positions at March 31, 2019.
Loss per share: Basic loss per share has been computed on the basis of the weighted-average number of ordinary shares outstanding during the periods presented. Diluted loss per share is computed based on the weighted-average number of ordinary shares outstanding and reflects the assumed exercise or conversion of diluted securities, such as stock options and warrants, computed using the treasury stock method.
Stock-Based Compensation: The Company accounts for stock-based compensation under the fair value recognition provisions of GAAP which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors, including stock options and restricted stock issuances based on estimated fair values. The Company measures compensation for restricted stock based on the price of the Company’s ordinary shares at the grant date. Determining the fair value of stock options at the grant date requires significant estimation and judgment. The Company uses an option-pricing model (Black-Scholes option pricing model) to assist in the calculation of fair value for stock options. The Company's shares have not been publicly traded for a sufficient length of time to solely use the Company's performance to reasonably estimate the expected volatility. Therefore, when estimating the expected volatility, the Company takes into consideration the historical volatility of similar entities. The Company considers factors such as an entity's industry, stage of life cycle, size and financial leverage when selecting similar entities. The Company uses a sample peer group of companies in the reinsurance industry and/or the Company’s own historical volatility in determining the expected volatility. Additionally, the Company uses the full life of the options, ten years, as the estimated term of the options, and has assumed no forfeitures during the life of the options.
The Company uses the straight-line attribution method for all grants that include only a service condition. Compensation expense related to all awards is included in general and administrative expenses.
Recent adopted accounting pronouncements:
Accounting Standards Update No. 2016-02. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which supersedes Topic 840 and creates the new lease accounting standards for lessees and lessors, primarily related to the recognition of lease assets and liabilities by lessees for leases classified as operating leases. Under previous guidance for lessees, leases were only included on the balance sheet if certain criteria, classifying the agreement as a capital lease, were met. This update requires the recognition of a right-of-use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months.
For operating leases, the asset and liability are expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability is recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability is classified as a financing activity while the interest component is included in the operating section of the statement of cash flows.
We adopted ASU 2016-02, ASU 2018-10 Codification Improvements to Topic 842: Leases and ASU 2018-11 Leases (Topic 842): Targeted Improvements on January 1, 2019. We applied the standards using the alternative transition method provided by ASU 2018-11 under which leases were recognized at the date of adoption and a cumulative-effective adjustment to the opening balance of retained earnings would have been recognized in the period of adoption. As the standard did not have an impact on our net earnings, no adjustment to the opening balance of retained earnings was required. As of March 31, 2019, $155 thousand of right-of-use assets and $149 thousand of lease liabilities for operating leases were added as operating lease right-of-use assets and operating lease liabilities line items, respectively, on the consolidated balance sheet as a result of the adoption of this update. We implemented controls for the adoption of the standard and the ongoing monitoring of the right-of-use asset and lease liability, but they did not materially affect our internal control over financial reporting.
Accounting Standards Update No. 2018-07. In June 2018, the FASB issued ASU No. 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The ASU is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share-based payments. The ASU expands the scope of Topic 718. Compensation Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity-Equity-Based payments to Non-Employees. The ASU is effective for the Company for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Effective January 1, 2019, the Company has adopted ASU 2018-07 there has been no material impact on the consolidated financial position, cash flows or results of operations.
Pending Accounting Updates:
Accounting Standards Update No. 2016-13. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 amends the guidance on reporting credits losses and affects loans, debt securities, trade receivables, reinsurance recoverable and other financial assets that have the contractual right to receive cash. The amendments are effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods. Early adoption is permitted for any organization for annual periods beginning after December 15, 2018 and interim periods within those annual periods. The Company is in the process of evaluating the impact of the requirements of ASU 2016-13 on the Company’s consolidated financial statements and anticipates implementing ASU 2016-13 during the first quarter of fiscal year 2020.
Accounting Standards Update No. 2018-13. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 removes, modifies and adds certain disclosure requirements associated with fair value measurements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. We are currently evaluating our timeline for the adoption of this ASU, which only affects the presentation of certain disclosures and is not expected to impact our results of operations, financial position or liquidity.
Segment Information: Under GAAP, operating segments are based on the internal information that management uses for allocating resources and assessing performance as the source of the Company’s reportable segments. The Company manages its business on the basis of one operating segment, Property and Casualty Reinsurance, in accordance with the qualitative and quantitative criteria established under GAAP.
Reclassifications: Certain reclassifications of prior period amounts have been made to conform to the current period presentation. |
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents |
Cash and cash equivalents are held by large and reputable counterparties in the United States of America and in the Cayman Islands. Restricted cash held in trust is custodied with SunTrust Bank and is held in accordance with the Company’s trust agreements with the ceding insurers and trustees, which require that the Company provide collateral having a market value greater than or equal to the limit of liability, less unpaid premium.
|
Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments |
The Company invests in fixed-maturity securities and equity securities, with its fixed-maturity securities classified as available-for-sale. At March 31, 2019, the Company did not hold any available-for-sale securities. At December 31, 2018, the cost or amortized cost, gross unrealized gains and losses, and estimated fair value of the Company’s available-for-sale securities by security type were as follows:
At March 31, 2019 and December 31, 2018, available-for-sale securities with fair value of $0 and $993,000, respectively, were held in trust accounts as collateral under reinsurance contacts with the Company’s ceding insurers.
Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. All of the Company's available for sale securities have scheduled contractual maturities after one year and through five years at December 31, 2018.
Proceeds received, and the gross realized gains and losses from sales of available-for-sale fixed-maturity securities, and equity securities, for the three months ended March 31, 2019 and 2018 were as follows:
The Company regularly reviews its individual investment securities for OTTI. The Company considers various factors in determining whether each individual debt security is other-than-temporarily impaired, including:
● the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or income;
● the length of time and the extent to which the market value of the security has been below its cost or amortized cost;
● general market conditions and industry or sector specific factors;
● nonpayment by the issuer of its contractually obligated interest and principal payments; and
● the Company’s intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.
At December 31, 2018, there were no available-for-sale securities in an unrealized loss position.
Assets Measured at Estimated Fair Value on a Recurring Basis
The following table presents information about the Company’s financial assets measured at estimated fair value on a recurring basis that is reflected in the consolidated balance sheets at carrying value. The table indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of March 31, 2019 and December 31, 2018:
There were no transfers between Levels 1, 2 and 3 during the three months ended March 31, 2019 and 2018. |
Derivative Instruments |
3 Months Ended |
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Mar. 31, 2019 | |
Derivative Instruments | |
Derivative Instruments |
Inward Industry Loss Warranty ("ILW") Swap
In January 2018, the Company entered into an inward ILW swap (the "2018 Inward ILW Swap") with a third-party under which qualifying loss payments are triggered by reference to the level of losses incurred by the insurance industry as a whole, rather than by losses incurred by the insured. In return for a fixed payment received of $1 million, the Company was required to make a floating payment in the event of certain losses incurred from specified natural catastrophes in North America, Caribbean, Europe, Japan, Australia, New Zealand and Latin America from January 2018 to December 2018. The Company’s maximum payment obligation under the 2018 Inward ILW Swap was $4 million. The ILW Swap expired on December 31, 2018 and the Company did not not renew the ILW Swap during the quarter ending March 31, 2019.
During the quarter ending March 31, 2019, the Company settled its payment obligation of $4 million under the 2018 Inward ILW Swap. |
Taxation |
3 Months Ended |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Taxation | Under current Cayman Islands law, no corporate entity, including the Company and the subsidiaries, is obligated to pay taxes in the Cayman Islands on either income or capital gains. The Company and its subsidiaries have an undertaking from the Governor-in-Cabinet of the Cayman Islands, pursuant to the provisions of the Tax Concessions Law, as amended, that, in the event that the Cayman Islands enacts any legislation that imposes tax on profits, income, gains or appreciations, or any tax in the nature of estate duty or inheritance tax, such tax will not be applicable to the Company and its subsidiaries or their operations, or to the ordinary shares or related obligations, until April 23, 2033 and May 17, 2033, respectively.
The Company and its subsidiaries intend to conduct substantially all of their operations in the Cayman Islands in a manner such that they will not be engaged in a trade or business in the U.S. However, because there is no definitive authority regarding activities that constitute being engaged in a trade or business in the U.S. for federal income tax purposes, the Company cannot assure that the U.S. Internal Revenue Service will not contend, perhaps successfully, that the Company or its subsidiary is engaged in a trade or business in the U.S. A foreign corporation deemed to be so engaged would be subject to U.S. federal income tax, as well as branch profits tax, on its income that is treated as effectively connected with the conduct of that trade or business unless the corporation is entitled to relief under an applicable tax treaty. |
Variable Interest Entities |
3 Months Ended |
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Mar. 31, 2019 | |
Variable Interest Entity, Measure of Activity [Abstract] | |
Variable Interest Entities | Oxbridge Re NS. On December 22, 2017, the Company established Oxbridge Re NS, a Cayman domiciled and licensed special purpose insurer, formed to provide additional collateralized capacity to support Oxbridge Reinsurance Limited’s reinsurance business. In respect of the debt issued by Oxbridge Re NS to investors, Oxbridge Re NS has entered into a retrocession agreement with Oxbridge Reinsurance Limited effective June 1, 2018. Under this agreement, Oxbridge Re NS receives a quota share of Oxbridge Reinsurance Limited’s catastrophe business. Oxbridge Re NS is a non-rated insurer and the risks have been fully collateralized by way of funds held in trust for the benefit of Oxbridge Reinsurance Limited. Oxbridge Re NS is able to provide investors with access to diversified natural catastrophe risk backed by the distribution, underwriting, analysis and research expertise of Oxbridge Re.
The Company has determined that Oxbridge Re NS meets the definition of a VIE as it does not have sufficient equity capital to finance its activities. The Company concluded that it is the primary beneficiary and has consolidated the subsidiary upon its formation, as it owns 100% of the voting shares, 100% of the issued share capital and has a significant financial interest and the power to control the activities of Oxbridge Re NS that most significantly impacts its economic performance. The Company has no other obligation to provide financial support to Oxbridge Re NS. Neither the creditors nor beneficial interest holders of Oxbridge Re NS have recourse to the Company’s general credit.
Upon issuance of a series of participating notes by Oxbridge Re NS, all of the proceeds from the issuance are deposited into collateral accounts, to fund any potential obligation under the reinsurance agreements entered into with Oxbridge Reinsurance Limited underlying such series of notes. The outstanding principal amount of each series of notes generally is expected to be returned to holders of such notes upon the expiration of the risk period underlying such notes, unless an event occurs which causes a loss under the applicable series of notes, in which case the amount returned is expected to be reduced by such noteholder's pro rata share of such loss, as specified in the applicable governing documents of such notes. In addition, holders of such notes are generally entitled to interest payments, payable annually, as determined by the applicable governing documents of each series of notes. Oxbridge Re Holdings Limited receives an origination and structuring fee in connection with the formation, operation and management of Oxbridge Re NS. Notes Payable to Series 2018-1 noteholders
Oxbridge Re NS issued $2 million of participating notes on June 1, 2018, all of which were issued to third parties and which provides quota share support for Oxbridge Re’s global property catastrophe excess of loss reinsurance business. The operations of Oxbridge Re NS commenced on June 1, 2018. The participating notes were due to mature on June 1, 2021. However, during the quarter ending December 31, 2018, the participating notes were triggered, and suffered full loss.
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Reserve for Losses and Loss Adjustment Expenses |
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Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Resserve for Losses and Loss Adjustment Expenses |
The following table summarizes the Company’s loss and loss adjustment expenses (“LAE”) and the reserve for loss and LAE reserve movements for the three-month periods ending March 31, 2019 and 2018:
The reserves for losses and LAE are comprised of case reserves (which are based on claims that have been reported) and IBNR reserves (which are based on losses that are believed to have occurred but for which claims have not yet been reported and include a provision for expected future development on existing case reserves). The Company uses the assistance of an independent actuary in the determination of IBNR and expected future development of existing case reserves.
The uncertainties inherent in the reserving process and potential delays by cedants and brokers in the reporting of loss information, together with the potential for unforeseen adverse developments, may result in the reserve for losses and LAE ultimately being significantly greater or less than the reserve provided at the end of any given reporting period. The degree of uncertainty is further increased when a significant loss event takes place near the end of a reporting period. Reserve for losses and LAE estimates are reviewed periodically on a contract by contract basis and updated as new information becomes known. Any resulting adjustments are reflected in income in the period in which they become known.
The Company’s reserving process is highly dependent on the timing of loss information received from its cedants and related brokers. |
Loss Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share |
A summary of the numerator and denominator of the basic and diluted loss per share is presented below (dollars in thousands except per share amounts):
For the three-month periods ended March 31, 2019 and 2018, options to purchase 540,000 ordinary shares were anti-dilutive due to net loss during the periods presented.
For the three-month periods ended March 31, 2019 and 2018, 8,230,700 warrants to purchase an aggregate of 8,230,700 ordinary shares were anti-dilutive due to net loss during the periods presented.
GAAP requires the Company to use the two-class method in computing basic loss per share since holders of the Company’s restricted stock have the right to share in dividends, if declared, equally with common stockholders. These participating securities effect the computation of both basic and diluted loss per share during periods of net loss.
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Shareholders' Equity |
3 Months Ended |
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Mar. 31, 2019 | |
Equity [Abstract] | |
Shareholders' Equity |
On February 28, 2014, the Company’s Registration Statement on Form S-1, as amended, relating to the initial public offering of the Company’s units was declared effective by the SEC. The Registration Statement covered the offer and sale by the Company of 4,884,650 units, each consisting of one ordinary share and one warrant (“Unit”), which were sold to the public on March 26, 2014 at a price of $6.00 per Unit. The ordinary shares and warrants comprising the Units began separate trading on May 9, 2014. The ordinary shares and warrants are traded on the Nasdaq Capital Market under the symbols “OXBR” and “OXBRW,” respectively. One warrant may be exercised to acquire one ordinary share at an exercise price equal to $7.50 per share on or before March 26, 2024, as amended. At any time after September 26, 2014 and before the expiration of the warrants, the Company at its option may cancel the warrants in whole or in part, provided that the closing price per ordinary share has exceeded $9.38 for at least ten trading days within any period of twenty consecutive trading days, including the last trading day of the period.
The initial public offering resulted in aggregate gross proceeds to the Company of approximately $29.3 million (of which approximately $5 million related to the fair value proceeds on the warrants issued) and net proceeds of approximately $26.9 million after deducting underwriting commissions and offering expenses.
There were 8,230,700 warrants outstanding at March 31, 2019 and 2018. No warrants were exercised during the three-month periods ended March 31, 2019 and 2018.
As of March 31, 2019, none of the Company’s retained earnings were restricted from payment of dividends to the company’s shareholders. However, since most of the Company’s capital and retained earnings may be invested in its subsidiaries, a dividend from the subsidiaries would likely be required in order to fund a dividend to the Company’s shareholders and would require notification to the Cayman Islands Monetary Authority (“CIMA”).
Under Cayman Islands law, the use of additional paid-in capital is restricted, and the Company will not be allowed to pay dividends out of additional paid-in capital if such payments result in breaches of the prescribed and minimum capital requirement. See also Note 12. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation |
The Company currently has outstanding stock-based awards granted under the 2014 Omnibus Incentive Plan (the “Plan”). Under the Plan, the Company has discretion to grant equity and cash incentive awards to eligible individuals, including the issuance of up to 1,000,000 of the Company’s ordinary shares. At March 31, 2019, there were 400,000 shares available for grant under the Plan.
Stock options
The Company accounts for share-based compensation under the fair value recognition provisions of ASC Topic 718 – “Compensation – Stock Compensation.” Stock options granted and outstanding under the Plan vests quarterly over four years and are exercisable over the contractual term of ten years.
A summary of the stock option activity for the three and nine-month periods ended March 31, 2019 and 2018 is as follows:
Compensation expense recognized for the three-month periods ended March 31, 2019 and 2018 totaled $9,000. Compensation expense is included in general and administrative expenses. At March 31, 2019 and 2018, there was approximately $112,000 and $44,000, respectively, of total unrecognized compensation expense related to non-vested stock options granted under the Plan. The Company expects to recognize the remaining compensation expense over a weighted-average period of thirty-nine (39) months.
During the three-month period ended March 31, 2019 and 2018, 290,000 (2018: Nil) options were granted with fair value estimated on the date of grant using the following assumptions and the Black-Scholes option pricing model:
At the time of the grant, the dividend yield was based on the Company’s history and expectation of dividend payouts at the time of the grant; expected volatility was based on volatility of similar companies’ common stock; the risk-free rate was based on the U.S. Treasury yield curve in effect and the expected life was based on the contractual life of the options.
Restricted Stock Awards
The Company has granted and may grant restricted stock awards to eligible individuals in connection with their service to the Company. The terms of the Company’s outstanding restricted stock grants may include service, performance and market-based conditions. The fair value of any awards with market-based conditions is determined using a Monte Carlo simulation method, which calculates many potential outcomes for an award and then establishes fair value based on the most likely outcome. The determination of fair value with respect to the awards with only performance or service-based conditions is based on the value of the Company’s stock on the grant date.
During the three-month periods ended March 31, 2019 and 2018, the Company did not grant any restricted stock. At March 31, 2019, there were no unvested restricted stock.
Compensation expense recognized for the three-month periods ended March 31, 2019 and 2018 totaled $0 and $22,000, respectively, and is included in general and administrative expenses. At March 31, 2019 and 2018, there was approximately $0 and $66,000, respectively, of total unrecognized compensation expense related to non-vested restricted stock granted under the Plan. |
Net Worth for Regulatory Purposes |
3 Months Ended |
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Mar. 31, 2019 | |
Text Block [Abstract] | |
Net Worth for Regulatory Purposes | The subsidiaries are subject to a minimum and prescribed capital requirement as established by CIMA. Under the terms of their respective licenses, Oxbridge Reinsurance Limited and Oxbridge Re NS are required to maintain a minimum and prescribed capital requirement of $500 in accordance with the relevant subsidiary’s approved business plan filed with CIMA.
At March 31, 2019, the Oxbridge Reinsurance Limited’s net worth of $1.9 million exceeded the minimum and prescribed capital requirement. For the three-month period ended March 31, 2019, the Subsidiary’s net loss was approximately $320 thousand.
At March 31, 2019, the Oxbridge Re NS’ net worth of $31 thousand exceeded the minimum and prescribed capital requirement. For the three-month period ended March 31, 2019, the Subsidiary’s net income was approximately $12 thousand.
The Subsidiaries are not required to prepare separate statutory financial statements for filing with CIMA, and there were no material differences between the Subsidiaries' GAAP capital, surplus and net income, and its statutory capital, surplus and net income as of March 31, 2019 or for the period then ended.
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Fair Value and Certain Risks and Uncertainties |
3 Months Ended |
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Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value and Certain Risks and Uncertainties | Fair values
With the exception of balances in respect of insurance contracts (which are specifically excluded from fair value disclosures under GAAP) and investment securities and derivative instruments as disclosed in Note 4 and 5 of these consolidated financial statements, the carrying amounts of all other financial instruments, which consist of cash and cash equivalents, restricted cash and cash equivalents, accrued interest and dividends receivable, premiums receivable and other assets and accounts payable and other liabilities, approximate their fair values due to their short-term nature.
Concentration of underwriting risk
A substantial portion of the Company’s current reinsurance business ultimately relates to the risks of two entities; accordingly, the Company’s underwriting risks are not significantly diversified.
Concentrations of Credit and Counterparty Risk
The Company’s derivative instruments are subject to counterparty risk. The Company routinely monitor this risk.
The Company markets retrocessional and reinsurance policies worldwide through its brokers. Credit risk exists to the extent that any of these brokers may be unable to fulfill their contractual obligations to the Company. For example, the Company is required to pay amounts owed on claims under policies to brokers, and these brokers, in the Company. In some jurisdictions, if a broker fails to make such a payment, the Company might remain liable to the ceding company for the deficiency. In addition, in certain jurisdictions, when the ceding company pays premiums for these policies to brokers, these premiums are considered to have been paid and the ceding insurer is no longer liable to the Company for those amounts, whether or not the premiums have actually been received.
The Company remains liable for losses it incurs to the extent that any third-party reinsurer is unable or unwilling to make timely payments under reinsurance agreements. The Company would also be liable in the event that its ceding companies were unable to collect amounts due from underlying third-party reinsurers.
In addition, the Company is exposed to credit risk on fixed-maturity debt instruments to the extent that the debtors may default on their debt obligations.
The Company mitigates its concentrations of credit and counterparty risk by using reputable and several counterparties which decreases the likelihood of any significant concentration of credit risk with any one counterparty. Additionally, the Company invests in fixed-maturity securities that are investment grade or higher.
Market risk
Market risk exists to the extent that the values of the Company’s monetary assets fluctuate as a result of changes in market prices. Changes in market prices can arise from factors specific to individual securities or their respective issuers, or factors affecting all securities traded in a particular market. Relevant factors for the Company are both volatility and liquidity of specific securities and markets in which the Company holds investments. The Company has established investment guidelines that seek to mitigate significant exposure to market risk.
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Leases |
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
We adopted ASU 2016-02, Leases on January 1, 2019, which resulted in the recognition of operating leases on the consolidated balance sheet in 2019 and forward. See Note 2 – Significant Accounting Policies for more information on the adoption of the ASU. Right-of-use assets and lease liabilities are disclosed as line in the consolidated balance sheet. We determine if a contract contains a lease at inception and recognize operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments at the commencement date. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Lease agreements that have lease and non-lease components, are accounted for as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.
The Company’s operating lease obligations are for the Company’s office facilities. Our lease have remaining lease terms of approximately 5 years, and include an option to extend the leases. Under the terms of the lease, the Company also has the right to terminate the lease after thirty-six (36) months upon giving appropriate notice in writing to the Lessor. The components of lease expense and other lease information as of and during the three-month period ended March 31, 2019 are as follows:
Future minimum lease payments under non-cancellable leases as of March 31, 2019, reconciled to our discounted operating lease liability presented on the consolidated balance sheet are as follows:
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | The Company had entered into reinsurance agreements with Claddaugh, which is a related entity through common directorships. At March 31, 2019 and December 31, 2018, there were no related-party amounts included within loss experience refund payable and unearned premiums reserve on the consolidated balance sheets.
During the three-month periods ended March 31, 2019 and 2018, included within change in loss experience refund payable and change in unearned premiums reserve on the consolidated statements of income are the following related-party amounts:
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | We evaluate all subsequent events and transactions for potential recognition or disclosure in our consolidated financial statements. There were no other events subsequent to March 31, 2019 for which disclosure was required.
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Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||
Cash and cash equivalents | Cash and cash equivalents: Cash and cash equivalents are comprised of cash and short- term investments with original maturities of three months or less. |
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Restricted cash and cash equivalents | Restricted cash and cash equivalents: Restricted cash and cash equivalents represent funds held in accordance with the Company’s trust agreements with ceding insurers and trustees, which requires the Company to maintain collateral with a market value greater than or equal to the limit of liability, less unpaid premium. |
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Investments | Investments: The Company’s investments consist of fixed-maturity securities and equity securities, and for which its fixed-maturity securities are classified as available-for-sale. The Company’s available for sale investments are carried at fair value with changes in fair value included as a separate component of accumulated other comprehensive loss in shareholders’ equity. For the Company’s investment in equity securities, the changes in fair value are recorded within the consolidated statements of operations.
Unrealized gains or losses are determined by comparing the fair market value of the securities with their cost or amortized cost. Realized gains and losses on investments are recorded on the trade date and are included in the consolidated statements of operations. The cost of securities sold is based on the specified identification method. Investment income is recognized as earned and discounts or premiums arising from the purchase of debt securities are recognized in investment income using the interest method over the remaining term of the security.
The Company reviews all fixed-maturity securities for other-than-temporary impairment ("OTTI") on a quarterly basis and more frequently when economic or market conditions warrant such review. When the fair value of any investment is lower than its cost, an assessment is made to see whether the decline is temporary of other-than-temporary. If the decline is determined to be other-than-temporary the investment is written down to fair value and an impairment charge is recognized in operations in the period in which the Company makes such determination. For a fixed-maturity security that the Company does not intend to sell nor is it more likely than not that the Company will be required to sell before recovery of its amortized cost, only the credit loss component is recognized in operations, while impairment related to all other factors is recognized in other comprehensive income. The Company considers various factors in determining whether an individual security is other-than-temporarily impaired (see Note 4).
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Fair value measurement | Fair value measurement: GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under GAAP are as follows:
Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. For fixed maturity securities, inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, broker quotes for similar securities and other factors. The fair value of investments in stocks and exchange-traded funds is based on the last traded price. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company’s investment custodians. The investment custodians consider observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant markets. The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument.
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Derivative Financial Instruments | Derivative Financial Instruments: The Company may from time to time enter into underwriting contracts such as industry loss warranty contracts (“ILW”) that are treated as derivatives for GAAP purposes. GAAP requires that an entity recognize all derivatives in the consolidated balance sheet at fair value. It also requires that unrealized gains and losses resulting from changes in fair value be included in operations or comprehensive loss. The Company’s derivative financial instrument assets are included in prepayments and other assets. Derivative financial instrument liabilities are included in accounts payable and other liabilities.
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Deferred policy acquisition costs ("DAC") | Deferred policy acquisition costs (“DAC”): Policy acquisition costs consist of brokerage fees, federal excise taxes and other costs related directly to the successful acquisition of new or renewal insurance contracts and are deferred and amortized over the terms of the reinsurance agreements to which they relate. The Company evaluates the recoverability of DAC by determining if the sum of future earned premiums and anticipated investment income is greater than the expected future claims and expenses. If a loss is probable on the unexpired portion of policies in force, a premium deficiency loss is recognized. At March 31, 2019, the Company had no DAC.
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Property and equipment | Property and equipment: Property and equipment are recorded at cost when acquired. Property and equipment are comprised of motor vehicles, furniture and fixtures, computer equipment and leasehold improvements and are depreciated, using the straight-line method, over their estimated useful lives, which are five years for furniture and fixtures and computer equipment and four years for motor vehicles. Leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or remaining lease term. The Company periodically reviews property and equipment that have finite lives, and that are not held for sale, for impairment by comparing the carrying value of the assets to their estimated future undiscounted cash flows. For the three month periods ended March 31, 2019 and 2018, there were no impairments in property and equipment.
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Allowance for uncollectible receivables | Allowance for uncollectible receivables: Management evaluates credit quality by evaluating the exposure to individual counterparties; where warranted management also considers the credit rating or financial position, operating results and/or payment history of the counterparty. Management establishes an allowance for amounts for which collection is considered doubtful. Adjustments to previous assessments are recognized as income in the year in which they are determined. At March 31, 2019, no receivables were determined to be overdue or impaired and, accordingly, no allowance for uncollectible receivables has been established.
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Reserves for losses and loss adjustment expenses | Reserves for losses and loss adjustment expenses: The Company determines its reserves for losses and loss adjustment expenses on the basis of the claims reported by the Company’s ceding insurers and for losses incurred but not reported (“IBNR”), management uses the assistance of an independent actuary. The reserves for losses and loss adjustment expenses represent management’s best estimate of the ultimate settlement costs of all losses and loss adjustment expenses. Management believes that the amounts are adequate; however, the inherent impossibility of predicting future events with precision, results in uncertainty as to the amount which will ultimately be required for the settlement of losses and loss expenses, and the differences could be material. Adjustments are reflected in the consolidated statements of operations in the period in which they are determined.
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Loss experience refund payable | Loss experience refund payable: Certain contracts include retrospective provisions that adjust premiums or result in profit commissions in the event losses are minimal or zero. In accordance with GAAP, the Company will recognize a liability in the period in which the absence of loss experience obligates the Company to pay cash or other consideration under the contracts. On the contrary, the Company will derecognize such liability in the period in which a loss experience arises. Such adjustments to the liability, which accrue throughout the contract terms, will reduce the liability should a catastrophic loss event covered by the Company occur.
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Premiums assumed | Premiums assumed: The Company records premiums assumed, net of loss experience refunds, as earned pro-rata over the terms of the reinsurance agreements, or period of risk, where applicable, and the unearned portion at the consolidated balance sheet date is recorded as unearned premiums reserve. A reserve is made for estimated premium deficiencies to the extent that estimated losses and loss adjustment expenses exceed related unearned premiums. Investment income is not considered in determining whether or not a deficiency exists.
Subsequent adjustments of premiums assumed, based on reports of actual premium by the ceding companies, or revisions in estimates of ultimate premium, are recorded in the period in which they are determined. Such adjustments are generally determined after the associated risk periods have expired, in which case the premium adjustments are fully earned when assumed.
Certain contracts allow for reinstatement premiums in the event of a full limit loss prior to the expiration of the contract. A reinstatement premium is not due until there is a full limit loss event and therefore, in accordance with GAAP, the Company records a reinstatement premium as written only in the event that the reinsured incurs a full limit loss on the contract and the contract allows for a reinstatement of coverage upon payment of an additional premium. For catastrophe contracts which contractually require the payment of a reinstatement premium equal to or greater than the original premium upon the occurrence of a full limit loss, the reinstatement premiums are earned over the original contract period. Reinstatement premiums that are contractually calculated on a pro-rata basis of the original premiums are earned over the remaining coverage period.
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Unearned premiums ceded | Unearned Premiums Ceded: The Company reduces the risk of future losses on business assumed by reinsuring certain risks and exposures with other reinsurers (retrocessionaires). The Company remains liable to the extent that any retrocessionaire fails to meet its obligations and to the extent that the Company does not hold sufficient security for their unpaid obligations.
Ceded premiums are written during the period in which the risk incept and are expensed over the contract period in proportion to the period of protection. Unearned premiums ceded consist of the unexpired portion of the reinsurance obtained.
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Uncertain income tax positions | Uncertain income tax positions: The authoritative GAAP guidance on accounting for, and disclosure of, uncertainty in income tax positions requires the Company to determine whether an income tax position of the Company is more likely than not to be sustained upon examination by the relevant tax authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position.
For income tax positions meeting the more likely than not threshold, the tax amount recognized in the consolidated financial statements, if any, is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. The application of this authoritative guidance has had no effect on the Company’s consolidated financial statements because the Company had no uncertain tax positions at March 31, 2019.
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Loss per share | Loss per share: Basic loss per share has been computed on the basis of the weighted-average number of ordinary shares outstanding during the periods presented. Diluted loss per share is computed based on the weighted-average number of ordinary shares outstanding and reflects the assumed exercise or conversion of diluted securities, such as stock options and warrants, computed using the treasury stock method.
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Stock-Based Compensation | Stock-Based Compensation: The Company accounts for stock-based compensation under the fair value recognition provisions of GAAP which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors, including stock options and restricted stock issuances based on estimated fair values. The Company measures compensation for restricted stock based on the price of the Company’s ordinary shares at the grant date. Determining the fair value of stock options at the grant date requires significant estimation and judgment. The Company uses an option-pricing model (Black-Scholes option pricing model) to assist in the calculation of fair value for stock options. The Company's shares have not been publicly traded for a sufficient length of time to solely use the Company's performance to reasonably estimate the expected volatility. Therefore, when estimating the expected volatility, the Company takes into consideration the historical volatility of similar entities. The Company considers factors such as an entity's industry, stage of life cycle, size and financial leverage when selecting similar entities. The Company uses a sample peer group of companies in the reinsurance industry and/or the Company’s own historical volatility in determining the expected volatility. Additionally, the Company uses the full life of the options, ten years, as the estimated term of the options, and has assumed no forfeitures during the life of the options.
The Company uses the straight-line attribution method for all grants that include only a service condition. Compensation expense related to all awards is included in general and administrative expenses.
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Recent accounting pronouncements | Recent adopted accounting pronouncements:
Accounting Standards Update No. 2016-02. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which supersedes Topic 840 and creates the new lease accounting standards for lessees and lessors, primarily related to the recognition of lease assets and liabilities by lessees for leases classified as operating leases. Under previous guidance for lessees, leases were only included on the balance sheet if certain criteria, classifying the agreement as a capital lease, were met. This update requires the recognition of a right-of-use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months.
For operating leases, the asset and liability are expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability is recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability is classified as a financing activity while the interest component is included in the operating section of the statement of cash flows.
We adopted ASU 2016-02, ASU 2018-10 Codification Improvements to Topic 842: Leases and ASU 2018-11 Leases (Topic 842): Targeted Improvements on January 1, 2019. We applied the standards using the alternative transition method provided by ASU 2018-11 under which leases were recognized at the date of adoption and a cumulative-effective adjustment to the opening balance of retained earnings would have been recognized in the period of adoption. As the standard did not have an impact on our net earnings, no adjustment to the opening balance of retained earnings was required. As of March 31, 2019, $155 thousand of right-of-use assets and $149 thousand of lease liabilities for operating leases were added as operating lease right-of-use assets and operating lease liabilities line items, respectively, on the consolidated balance sheet as a result of the adoption of this update. We implemented controls for the adoption of the standard and the ongoing monitoring of the right-of-use asset and lease liability, but they did not materially affect our internal control over financial reporting.
Accounting Standards Update No. 2018-07. In June 2018, the FASB issued ASU No. 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The ASU is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share-based payments. The ASU expands the scope of Topic 718. Compensation Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity-Equity-Based payments to Non-Employees. The ASU is effective for the Company for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Effective January 1, 2019, the Company has adopted ASU 2018-07 there has been no material impact on the consolidated financial position, cash flows or results of operations.
Pending Accounting Updates:
Accounting Standards Update No. 2016-13. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 amends the guidance on reporting credits losses and affects loans, debt securities, trade receivables, reinsurance recoverable and other financial assets that have the contractual right to receive cash. The amendments are effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods. Early adoption is permitted for any organization for annual periods beginning after December 15, 2018 and interim periods within those annual periods. The Company is in the process of evaluating the impact of the requirements of ASU 2016-13 on the Company’s consolidated financial statements and anticipates implementing ASU 2016-13 during the first quarter of fiscal year 2020.
Accounting Standards Update No. 2018-13. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 removes, modifies and adds certain disclosure requirements associated with fair value measurements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. We are currently evaluating our timeline for the adoption of this ASU, which only affects the presentation of certain disclosures and is not expected to impact our results of operations, financial position or liquidity.
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Segment Information | Segment Information: Under GAAP, operating segments are based on the internal information that management uses for allocating resources and assessing performance as the source of the Company’s reportable segments. The Company manages its business on the basis of one operating segment, Property and Casualty Reinsurance, in accordance with the qualitative and quantitative criteria established under GAAP.
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Reclassifications | Reclassifications: Certain reclassifications of prior period amounts have been made to conform to the current period presentation. |
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents (Tables) |
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Cash and Cash Equivalents [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Cash and Cash Equivalents and Restricted Cash and Cash Equivalents |
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Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Available-for-sale Securities |
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Summary of Proceeds Received, and Gross Realized Gains and Losses from Sales of Available-for-sale Securities |
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Fair Value of Assets Measured on Recurring Basis |
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Reserve for Losses and Loss Adjustment Expenses (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of loss and loss adjustment expenses |
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Loss Per Share (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of basic and diluted (loss) earnings per share |
|
Share-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Activity |
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Estimated Fair Value of Options Granted using Black-Scholes Option-Pricing Model with Weighted-Average Assumptions |
|
Leases (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases Tables Abstract | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating lease obligations |
(1) Includes short-term leases
|
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Future minimum lease payments |
|
Related Party Transactions (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Related Party Transactions |
|
Organization and Basis of Presentation (Details Narrative) |
3 Months Ended |
---|---|
Mar. 31, 2019
Integer
| |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Equity Method Investment, Ownership Percentage | 100.00% |
Number of business operating segments | 1 |
Significant Accounting Policies (Details Narrative) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Furniture and Fixtures [Member] | |
Significant Accounting Policies [Line Items] | |
Fixed asset, Estimated useful life | 5 years |
Computer Equipment [Member] | |
Significant Accounting Policies [Line Items] | |
Fixed asset, Estimated useful life | 5 years |
Motor Vehicles [Member] | |
Significant Accounting Policies [Line Items] | |
Fixed asset, Estimated useful life | 4 years |
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Cash and Cash Equivalents [Abstract] | ||
Cash on deposit | $ 3,681 | $ 3,965 |
Cash held with custodians | 4,213 | 4,109 |
Restricted cash held in trust | 148 | 3,225 |
Total | $ 8,042 | $ 11,299 |
Investments (Details 1) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Debt Securities, Available-for-sale [Line Items] | ||
Cost or Amortized Cost, Total available-for-sale securities | $ 991 | |
Total estimated fair value available for sale | $ 0 | 993 |
Fixed Maturities [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Due within one year | 0 | 0 |
Due after one year through five years | 0 | 991 |
Cost or Amortized Cost, Total available-for-sale securities | 0 | 991 |
Due within one year | 994 | 0 |
Due after one year through five years | 3,402 | 993 |
Total estimated fair value available for sale | $ 4,396 | $ 993 |
Investments (Details 2) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Fixed Maturities [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Proceeds | $ 994 | $ 3,000 |
Gross Realized Gains | 3 | 3 |
Gross Realized Losses | 0 | 0 |
Equity Securities [Member] | ||
Debt Securities, Available-for-sale [Line Items] | ||
Proceeds | 0 | 6,033 |
Gross Realized Gains | 0 | 418 |
Gross Realized Losses | $ 0 | $ (594) |
Investments (Details Narrative) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Amortized Cost and Fair Value Debt Securities [Abstract] | ||
Fair value of securities held in trust accounts | $ 0 | $ 993 |
Reserve for Losses and Loss Adjustment Expenses (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Balance, beginning of period | $ 4,108 | $ 4,836 |
Incurred related to: Current period | 0 | 0 |
Incurred related to: Prior period | 0 | 0 |
Total incurred | 0 | 0 |
Paid related to: Current period | 0 | 0 |
Paid related to: Prior period | (4,001) | (682) |
Total paid | (4,001) | (682) |
Balance, end of period | $ 107 | $ 4,154 |
Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Numerator: | ||
Net loss | $ (147) | $ (211) |
Denominator: | ||
Weighted average shares-basic | 5,733,587 | 5,733,587 |
Weighted average shares-diluted | 5,733,587 | 5,733,587 |
Loss per share - basic | $ (0.03) | $ (0.04) |
Loss per share - diluted | $ (0.03) | $ (0.04) |
Loss Per Share (Details Narrative) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Warrants exercise price | $ 7.50 | |
Employee Stock Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | 540,000 | 540,000 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | 8,230,700 | 8,230,700 |
Share-Based Compensation (Details 1) - Employee Stock Option [Member] |
3 Months Ended |
---|---|
Mar. 31, 2018
$ / shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected dividend yield | 0.00% |
Expected volatility | 31.00% |
Risk-free interest rate | 2.59% |
Expected life (in years) | 10 years |
Per share grant date fair value of options issued | $ 0.36 |
Share-Based Compensation (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Incentive Stock Option Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares available for grant | 400,000 | |
Share based compensation arrangement, vesting period | 4 years | |
Unrecognized compensation expense, non-vested stock options | $ 112 | $ 44 |
Unrecognized compensation cost, Weighted average recognition period | 39 months | |
Unrecognized compensation expense, non-vested restricted stock | $ 0 | 66 |
General and Administrative Expense [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock compensation expense recognized | 9 | 9 |
Restricted Stock [Member] | General and Administrative Expense [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock compensation expense recognized | $ 0 | $ 22 |
Net Worth for Regulatory Purposes (Details Narrative) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Minimum prescribed capital requirement | $ 500 |
Oxbridge Reinsurance Limited | |
Subsidiary net worth | 1,900 |
Subsidiary's net income (loss) | (320) |
Oxbridge Re NS | |
Subsidiary net worth | 31 |
Subsidiary's net income (loss) | $ 12 |
Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Leases Details 1Abstract | ||
Operating Lease Cost | $ 19 | |
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows from operating leases | 33 | |
Operating lease right-of-use assets | 155 | $ 0 |
Operating lease liabilities | $ 149 | $ 0 |
Weighted-average remaining lease term - operating leases | 4 years 11 months 1 day | |
Weighted-average discount rate - operating leases | 6.50% |
Leases (Details 1) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Leases Details Abstract | ||
Remainder 2019 | $ 21 | $ 0 |
2020 | 36 | 0 |
2021 | 36 | 0 |
2022 | 37 | 0 |
2023 | 37 | 0 |
Thereafter | 6 | 0 |
Total future minimum lease payments | 173 | 0 |
Less imputed interest | (24) | 0 |
Total operating lease liability | $ 149 | $ 0 |
Related Party Transactions (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Revenue | ||
Change in unearned premiums reserve | $ 0 | $ 355 |
Claddaugh And Hcpci [Member] | ||
Revenue | ||
Change in loss experience refund payable | 0 | (135) |
Change in unearned premiums reserve | $ 0 | $ 355 |
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