Oxbridge Re raises $2.4m for sidecar via DeltaCat Re tokenized reinsurance securities

Oxbridge Re Ltd., the Cayman Islands based reinsurance firm with a Gulf Coast risk focus, has successfully raised $2.4 million through the sale of digital or tokenized reinsurance securities named DeltaCat Re, which will be used to support collateralized reinsurance contracts underwritten via its sidecar structure, Oxbridge Re NS.

We first reported at the beginning of February on Oxbridge Re’s plans to use its registered subsidiary SurancePlus Inc. to issue tokenized reinsurance securities that are issued using the Avalanche blockchain.

The securities represent fractionalized interests in reinsurance contracts written by its reinsurance sidecar, Oxfbridge Re NS, with investors set to benefit from a return through the performance of the underlying reinsurance contracts that will sit in the sidecar.

The offering opened in late March, with Oxbridge Re also revealing at the time that the tokenized reinsurance securities are expected to be made tradable via a secondary marketplace.

SurancePlus has now closed the offering, with a $2.4 million private capital raise through the sale of 244,776 of its tokenized reinsurance security, DeltaCat Re.

The securities capital will now be used by Oxbridge Re’s reinsurance sidecar subsidiary, Oxbridge Re NS, for contracts written for the 2023-2024 treaty year.

Oxbridge Re’s President and Chief Executive Officer Jay Madhu commented, “SurancePlus innovated upon Oxbridge Re’s existing special purpose vehicle for raising reinsurance capital, Oxbridge Re NS Limited, by applying digital innovations and insights from the Web3 space and democratizing access to reinsurance as an alternative investment.

“In doing so, we believe that we are the first publicly traded company to successfully raise capital for catastrophe reinsurance risks through the sale of tokenized reinsurance securities.”

The DeltaCat Re Tokens were sold to accredited investors in the United States under Rule 506(c) of Regulation D and to non-US investors pursuant to Regulation S of the US Securities Act 1933, as amended.

The tokenized securities were issued under a series named Cat Re, with DeltaCat Re the first offering from it, and Oxbridge Re hopes to have additional tokens offered in years to come.

Oxbridge Re said previously that it sees a significant opportunity for investors to access reinsurance linked returns through its digital securities, with returns of 42% said to be possible in the first year, which is presumably under loss free conditions.

The idea is to bring in capital through a differentiated source, while the tokenized Preferred Shares are expected to facilitate liquidity for investors.

While this is a relatively small capital raise, in reinsurance sidecar terms, for Oxbridge Re this will actually be the biggest for its Oxbridge Re NS vehicle, the previous largest having been $2 million back in 2018.

Oxbridge Re then launched a second, smaller reinsurance sidecar transaction in June 2019, when it sponsored a $600,000 Oxbridge Re NS issuance.

Then, in 2020, Oxbridge Re renewed its fully-collateralised reinsurance sidecar vehicle Oxbridge Re NS Ltd. at a downsized amount of just $216,000.

So, this new method of raising capital for the sidecar vehicle has proved to be the most successful to-date and it will be interesting to see how much future offerings under SurancePlus can raise.

View details of many reinsurance sidecar transactions in our directory.