Oxbridge Re’s tokenized reinsurance sidecar securities realise 49% return

Cayman headquartered reinsurance company Oxbridge Re has reported that the firm’s first series of tokenized reinsurance sidecar securities have now realised a 49% return for the investors backing them, surpassing both initial and updated expectations.

Oxbridge Re launched its Web3 startup SurancePlus in 2022, raising $2.4 million through a sale of the first series of digital or tokenized reinsurance securities, which were named DeltaCat Re.

That $2.4 million of capital was put to work in support of collateralized reinsurance contracts underwritten via the reinsurer’s sidecar structure, Oxbridge Re NS.

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

As a result, the investors benefit from a return through the performance of the underlying reinsurance contracts that the sidecar held for the underwriting year, which ends at the mid-point of 2024.

Oxbridge Re had been anticipating that investors in the first series of tokenized reinsurance securities would receive a roughly 42% return for the first treaty year.

A few months later, Oxbridge Re CEO Jay Madhu explained that he anticipated a higher return for the sidecar securities investors, saying that it could be 45% for the latest treaty year.

Now, the company has reported today that SurancePlus earned a 49.11% return on its tokenized reinsurance security, DeltaCat Re far exceeding the initial projection of 42%.

Jay Madhu, President and CEO of Oxbridge Re, commented, “Last year, SurancePlus enhanced Oxbridge Re’s special purpose vehicle, Oxbridge Re NS, by integrating digital innovations and insights by offering an RWA tokenized security, thus making reinsurance more accessible as an alternative investment through the Avalanche blockchain. We are pleased with the impressive returns for DeltaCat Re token investors.

“Looking ahead, we are excited about the long-term prospects of our business as we approach the close of our capital raise for the 2024/25 EpsilonCat Re Token.”

Oxbridge Re began that process of raising up to a $10 million target for the EpsilonCat Re tokenized reinsurance securities that will be issued by its subsidiary SurancePlus Inc. and provide investors a way to participate in the 2024/25 underwriting treaty year of the Oxbridge Re NS sidecar structure.

Back in 2019, Oxbridge Re’s sidecar returned 36% to its investors in a catastrophe loss free year.

The 49% earned in the most recent treaty year is therefore both impressive and a reflection of the hard reinsurance market and much improved terms now available in the marketplace.

As we reported yesterday, Oxbridge Re has announced 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.

So the future is not yet clear for Oxbridge Re, or its strategy to leverage digital asset architecture to facilitate fractionalised investments in its reinsurance sidecar vehicle, but the stellar returns generated for investors should help the company attract attention.