Good afternoon. Welcome to Oxbridge Re's Second Quarter 2020 Earnings. My name is Melinda and I will be your conference operator this afternoon. At this time, all participants will be in a listen-only mode.

Joining us for today's presentation is Oxford Re's Chairman, President and Chief Executive Officer, Jay Madhu; and Chief Financial Officer and Corporate Secretary, Wrendon Timothy. Following their remarks we will open up the call for your questions.

I would like to remind everyone that this call is being broadcast live via webcast and available via webcast replay until 2020 on the Investor Information section of the Oxbridge Re website at www.oxbridgere.com.

Now I would like to turn the call over to Wrendon Timothy, Chief Financial Officer of Oxbridge Re, who will provide the necessary cautions regarding the forward-looking statements that will be made by management during this call. Sir, please proceed..

Thank you, operator. During today's call, there will be forward-looking statements made regarding future events including Oxbridge Re's future financial performance.

These forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995, words such as anticipates estimates expects intends plans projects and other similar words and expressions are intended to signify forward-looking statements.

Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. Some of these risks and uncertainties are identified in the company's filings with the SEC.

The occurrence of any of these risks and uncertainties could have a material adverse effect on the company's business, financial condition and results of operations.

Any forward-looking statements made on this conference call speak only as of the date of this conference call and except as required by law, the company undertakes no obligation to update any forward-looking statements contained on this call or in any company presentation, even if the company's expectations or any related events conditions or circumstances change.

In addition, on March 11, 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic, the disruption of global commercial activities across all market sectors and the significant declines in volatility in financial markets as a result of the COVID-19 pandemic could result in a material adverse impact on our financial position, results of operations and cash flows.

Possible effects may include, but are not limited to, uncertainties with respect to current and future losses reduction in interest rates, equity and market volatility and ongoing business and financial market impacts of an economic downturn.

The insurance industry is likely to experience material losses resulting from COVID-19, which will reduce the available capital and we expect it will help to sustain the upward pricing trend for reinsurers that we have seen across many lines of business before COVID-19.

However, the ultimate impact on current business in-force, as well as risks and potential opportunities on future business remains highly uncertain. Now, I would like to turn the call over to our Chairman, President and Chief Executive officer, Jay Madhu.

Jay?.

Thank you, Wrendon, and welcome, everyone. Thank you for joining us today. Over the last six months we experienced a world that was severely challenged by the COVID-19 pandemic. Our key goal during these challenging times is to ensure the health and safety of our employees and our community.

The pandemic, however, has not adversely affected our business at this time. We are monitoring our markets on the insurance industry in general and I look forward to keeping you posted of our progress during these difficult times. We are pleased, however, to return to normal business operations after months of disruption.

While our operations and business remained stable as we all worked remotely, it is good to get back to our offices and continue the collegial work environment and culture of performance we had developed over the years. Should things change in the future, we will revert to working remotely to ensure the well-being of our team.

As we do each quarter, before we get to our results, I would like to take a moment to provide a brief overview of our company. Oxbridge Re Holdings Limited was founded over six years ago, with a mission to provide reinsurance solutions, primarily to property and casualty insurers in the Gulf Coast region of the United States.

Through our licensed reinsurance subsidiary Oxbridge Reinsurance Limited and our licensed reinsurance sidecar Oxbridge Re NS, we write fully collateralized policies to cover property losses from specific catastrophes.

And as some of you already know, because we write fully collateralized contracts, we are able to compete effectively with larger carriers. We specialize in underwriting low frequency, high severity risks, where we believe sufficient data exists to effectively analyze the risk/return profile of reinsurance contracts.

Our objective is to achieve long-term growth and book value per share by writing business on a selective and opportunistic basis that will generate attractive underwriting profits relative to risk.

Regarding our investment portfolio, we remain opportunistic and will deploy our capital whenever favorable return opportunities arise, which we believe will in turn drive our results through supplemental investment income. That being said, our focus on top priority remains on profitable underwriting. Turning to our results.

We are glad to report an improved performance in this second quarter and first six months of 2020 compared to the prior year. Revenues were up, primarily to an increase in net premiums earned and investment gains.

Combined with our initiatives to reduce operating costs, we generated solid net income in the quarter compared to a loss in last year's second quarter and significantly reduced our loss for the six months ended June 30. Our key financial ratios also strengthened compared to 2019.

In addition, we continue to make progress in the third year of operations of our wholly owned subsidiary Oxbridge Re NS, our reinsurance sidecar. For the contract year ended May 31, 2020 our sidecar investors earned an attractive return of approximately 36%. I'll now turn things over to Wrendon to take us through our financial results.

Wrendon?.

Thank you, Jay. First a point to note is our typical contract period is from June 1 to May 31 of the following year. Net premiums earned for the three months ended June 30, 2020 increased to $135,000 from $93,000 in the prior year. For the full six months of 2020 net premiums earned increased to $400,000 from $93,000 in the prior year.

The increases are due to only one month premium being recognized through the first 6 months of the prior year, as a result of previous accelerated premium recognition when compared to normal premium recognition in 2020.

Net investment and other income for the second quarter of 2020 totaled $25,000 coupled with net realized gains of $320,000 and $2000 of positive change in fair value of equity securities. This compares with $64,000 of net investment income for the prior period coupled with the decrease in fair value of equity securities of $48,000.

For the six months ended June 30, 2020 net investment income totaled $57,000 coupled with $326,000 of net realized gains and a decrease in fair value of equity securities of $324,000.

This compares with net investment income of $128,000 coupled with $3000 of net realized gains and $3000 of increase in fair value of equity securities from the prior period.

Total expenses including loss and loss adjustment expenses, policy acquisition costs and general and admin expenses remained stable in the second quarter at $297,000 compared with $290,000 in the second quarter of 2019. For the six months ended June 30, 2020 total expenses were slightly higher at $572,000 compared to $554,000 last year.

The increase attributed to higher policy acquisition costs was due to the normal recognition of policy acquisition costs during the current period when compared with no recognition in the prior year period due to the previous acceleration of such costs upon suffering limit losses on reinsurance contracts.

On the other hand for the full 6 months of 2020, G&A cost were reduced to $528,000 from $544,000 last year. The decrease in general and admin expenses was a result of further cost saving initiatives we have implemented.

With the higher revenue and reduced expenses we generated net income of $165,000 or $0.03 per share in the second quarter of 2020 much improved from the loss of $205,000 or a loss of $0.04 per share in the second quarter of 2019. For the six months ended June 30 2020 our net loss was much improved to $199,000 down from $351,000 in 2019.

Turning to our financial ratios, we generated solid improvement across the board for the 3 and 6 months ended June 30, 2020. We use various measures to analyze the growth and profitability of our business operations. For reinsurance business, we measure underwriting profitability by examining our loss ratio acquisition ratio and combined ratio.

Our loss ratio which measures underwriting profitability is the ratio of losses and loss adjustment expenses incurred to net premiums earned. Our loss ratio for the second quarter and first 6 months of 2020 was 0%, the same as last year as there were no loss or loss adjustment expenses in either year.

Our acquisition cost ratio which measures operational efficiency compares policy acquisition costs and other underwriting expenses to net premiums earned. Our acquisition cost was 11.1% and 11% for the second quarter and for 6 months of 2020 respectively compared to 10.8% for the same period last year.

The increase was due to a marginally higher weighted average acquisition costs on reinsurance contracts in force this year compared to last year. Our expense ratio which measures operating performance compares policy acquisition costs and general and admin expenses with net premiums earned.

The expense ratio improved in the second quarter and for 6 months of 2020 to 220% and 143% respectively compared to 311% and 595.7% for the same period last year. The improvement is due to the reduced general and admin expenses this year and a higher denominator in net premiums earned to-date in 2020 when compared with the same period in 2019.

Our combined ratio is used to measure underwriting performance which is the sum of the loss ratio and the expense ratio. The combined ratio for the 3 and 6 months period ended June 30, 2020 was 220% and 143% respectively compared to 311.8% and 595.7% in 2019.

The improvement is due again to the higher denominator in net premiums earned and reduced total expenses in 2020 compared with the prior year. Now turning to the balance sheet. Total investments which include investments in equity securities totaled $949,000 at June 30, 2020 compared with $692,000 at December 31, 2019.

The increase is due to the purchase of equity securities during the current year. At June 30, 2020 cash and cash equivalents and restricted cash and cash equivalents totaled $7 million compared with $8 million at December 31, 2019. Total shareholders' equity at June 30, 2020 was $7.9 million compared to $8 million at December 31, 2019.

At June 30, 2020, our book value per share stood at $1.37. Now with that, I'd like to turn the call back over to Jay.

Jay?.

It appears we've lost Mr. Madhu. It looks like he is tailing right back in. Ladies and gentlemen, Mr. Madhu has rejoined and he will pick up..

Yes. Sorry about that. Thank you, Wrendon. Through our reinsurance sidecar, we've been able to add a degree of diversity to our revenue streams and risk, while still having the ability to achieve attractive returns.

As mentioned before, we are very pleased with the returns generated for the contract year ending May 31, 2020 where our sidecar investors earned an attractive return of 36%. We look to grow that portion of our business.

Going forward, over the long term, we remain opportunistic about the prospects of not only our core business but also our reinsurance sidecar. We continue to evaluate additional opportunities for growth as well as diversification of risk. So in closing, we continue to reduce our G&A costs.

Our sidecar investors have earned an attractive return of 36%, our book value per share is $1.37 and mostly in cash, we are debt-free, we have a strong balance sheet with a strong cash position and most importantly, we have real opportunity for growth and a viable business model. With that, we are ready to open for calls for questions.

Operator, please provide the appropriate instructions..

Thank you. The floor is now open for your questions. [Operator Instructions] And it looks like our first question comes from Kent Engelke with Capitol Security Management. Please go ahead..

Hey, Jay, hey, Wrendon.

Any impact from the storm that came up the coast last week?.

Yes. Hi, Kent, thank you for that. Yes. No as of now, we don't have anything to report on that. Obviously, things can develop. But the – but all indications are it's not an issue..

Cool. Something I heard Wrendon say, I want to make sure I understood – I heard this correctly, which I think is great for reinsurance. You said for – you're seeing greater pricing flexibility just because of everything that's taking place on reinsurance contracts.

I heard that correctly did I not?.

Yes you did. We have seen some price improvement. But again, hopefully, this continues but we'll see how it all goes..

Cool. Hey, congratulations on the quarter and the like. And hopefully, this is the start of the trend..

Thank you. Appreciate it..

[Operator Instructions] And at this time we have no further signals. I'll turn the call back over to Mr. Madhu for his closing remarks..

Thank you all for being on the call. We appreciate your patience and consideration. We look forward to updating you as we move forward. Thank you..

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