Oxbridge Re to add second tranche to tokenized reinsurance sidecar offering

Oxbridge Re Ltd., the Cayman Islands based reinsurance company, is planning to expand its offering of tokenized reinsurance securities that fund its collateralized reinsurance sidecar vehicle Oxbridge Re NS, with the launch of a second tranche of notes that appear set to have a lower risk-return profile.

Oxbridge Re launched a Web3-focused subsidiary named SurancePlus back in 2022, as it looked to implement a strategy of issuing tokenized reinsurance securities using the Avalanche blockchain.

These tokenized reinsurance securities effectively act as a funding mechanism to support the firm’s collateralized reinsurance sidecar vehicle Oxbridge Re NS.

The reinsurer raised $2.4 million through the sale of the first series of digital or tokenized reinsurance securities, which were named DeltaCat Re in 2023.

That $2.4 million of capital was used to support collateralized reinsurance contracts, underwritten via its sidecar structure, Oxbridge Re NS.

The company later reported that the DeltaCat Re series of tokenized reinsurance sidecar securities realised a 49% return for the investors backing them, surpassing both initial and updated expectations.

Then, earlier in 2024, Oxbridge Re raised $2.88 million for its sidecar structure through a series of EpsilonCat Re tokenized reinsurance securities, issued by its subsidiary SurancePlus Inc.

For this latest set of EpsilonCat Re digital reinsurance securities, Oxbridge Re said at the time of issuance that the targeted return would be 42% this year.

Jay Madhu, Chairman and CEO of Oxbridge Re recently explained that going forwards, the company intends to issue two tranches of tokenized reinsurance securities, one higher and one lower risk/return, offering more investment options to access the returns of its reinsurance business.

He explained, “We are energized by the progress of our Web3/RWA subsidiary, SurancePlus, which issues tokenized securities backed by reinsurance contracts as the underlying asset and currently launched on the Avalanche blockchain. SurancePlus seamlessly integrates SEC regulatory standards with blockchain technology, ensuring full transparency and compliance.

“By opening access to an asset class historically limited to a select few due to high financial barriers to entry, SurancePlus is breaking new ground. Leveraging RegD and RegS frameworks, investors can now enter this unique asset class within minutes, efficiently completing AML, KYC, and document signing requirements.

“Going forward, we intend to issue two tranches of tokenized securities, one high yield token targeting a 42% return, and one balance yield token targeting a 22% return. Additionally, our strategic partnership with Zoniqx, which has facilitated over $4 billion of assets on-chain, positions SurancePlus for continued growth as we enter our second year of issuing tokenized securities. With a solid business model and no debt, we are confident that SurancePlus will drive meaningful growth for our shareholders and further expand our influence in the RWA space in the coming years.”

Expanding the range of reinsurance investment opportunities available through its digital securities platform may help Oxbridge Re in attracting more investor support for future issuances.

As we reported earlier this year, a new ILS focused investment manager named Members Capital Management Ltd. has launched with a mission to (re)diversify sources of reinsurance capital using digital and tokenized assets.

The strategy of leveraging digital asset technology and architecture to facilitate fractionalised investments into reinsurance-linked securities is gaining traction, it seems.

It is an intriguing way to both modernise the matching of capital with insurance risk and also tap into differentiated sources of funding for ILS strategies.

Finally, as we had also reported in 2024, Oxbridge Re had announced that it was considering “strategic alternatives” for the business, including a potential sale or merger, various capital actions, or even spinning out its tokenized reinsurance investments unit. It seems plans continue to evolve at the company, with this planned expansion of the tokenized reinsurance-linked investment opportunities it will offer.

View details of many reinsurance sidecar transactions in our directory.