Oxbridge Re considering “strategic alternatives” including sale or merger

Oxbridge Re Ltd., the Cayman Islands based reinsurance company, has announced today that it is considering “strategic alternatives” for the business, including a potential sale or merger, various capital actions, or even spinning out its tokenized reinsurance investments unit.

Oxbridge Re launched what it calls its Web3 startup SurancePlus back in 2022, since when it has been issuing tokenized reinsurance securities, that effectively give investors a way to access the returns of its catastrophe focused reinsurance business.

Previously, Oxbridge Re had been operating a typical collateralized reinsurance sidecar, alongside its own collateralized balance-sheet.

But the SurancePlus strategy sought to take advantage of digital securities technology, to provide an alternative access point for investors, utilising blockchain type infrastructure.

When we last reported on the company, Jay Madhu, the Chairman and Chief Executive Officer of Cayman headquartered reinsurer Oxbridge Re, had said that the firm’s first series of tokenized reinsurance sidecar securities were set to deliver investors a 45% return, surpassing the initial expectation of 42%.

The securities represent fractionalized interests in reinsurance contracts written by Oxbridge Re’s reinsurance sidecar vehicle, Oxbridge Re NS, which enters into quota shares with its parent.

So the investors access a return through the performance of the underlying reinsurance contracts that sat in the sidecar for the current underwriting year, which runs to the mid-point of 2024.

Today, Oxbridge Re said that its board of directors has “initiated a process to evaluate strategic alternatives to maximize shareholder value.”

Explaining that, “As part of the evaluation process, the Company will consider a full range of strategic alternatives for the Company, and/or its Web-3 division subsidiary SurancePlus Holdings Ltd, including a sale, spinout, merger, divestiture, recapitalization, and other strategic transactions, or continuing to operate as a public, independent company.”

CEO Madhu further said, “To reinforce our strategic vision, we are committed to exploring opportunities that will deliver value to our stakeholders and ensure continued success in our evolving industries.”

The company further said that it cannot guarantee that the evaluation of strategic options will result in any deal or transaction.

Oxbridge Re has never really scaled into a particularly meaningful reinsurance player. But its tokenized reinsurance securities are the first and only such tech-focused initiative to come out of the traditional reinsurance market and so could prove attractive to players that consider this a viable approach to partnering with investors and bringing alternative capital into an underwriting business.