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Oxbridge Re falls to Q2 loss, net earned premiums down significantly

2nd August 2019 - Author: Luke Gallin

Property and casualty reinsurer Oxbridge Re Holdings Limited has recorded a net loss of $205,000 for the second-quarter of 2019, as net earned premiums declined significantly to $93,000, compared with $334,000 a year earlier.

Oxbridge-Re-LogoThe reinsurer’s Q2 2019 net loss compares with net income of $265,000 in Q2 2018, and is driven by the reduction in net earned premiums which was a result of a decline in capital deployed during the quarter.

It seems that the catastrophe events of 2018 hit Oxbridge Re hard, with the firm noting that the substantial dip in net earned premiums was “wholly due to the previous acceleration of premium recognition due to full limit losses being incurred on all of the Company’s reinsurance contracts” during Q4 2018. Furthermore, lower capital deployed in the second-quarter of 2019 when compared with the second-quarter of 2018, also drove down net earned premiums.

The loss ratio totalled 0% in Q2 2019 as a result of no loss and loss adjustment expenses incurred in the quarter on the significant dip in net earned premiums. The acquisition cost ratio reached 10.8% in Q2 2019 compared with 8.7% a year earlier.

At $290,000, the reinsurer’s total expenses declined from the $396,000 recorded a year earlier, which Oxbridge Re attributes to a decline in policy acquisition costs and underwriting expenses as a result of lower net earned premiums and some cost saving initiatives implemented by the firm.

Overall, the reinsurer’s expense ratio hit 311.8% in the second-quarter of 2019, which compares to 73.1% a year earlier. “The increase in expense ratio was due primarily to a lower denominator in net premiums earned and net income from derivative instruments as recorded during the three-month period ended June 30, 2019 when compared with the same year-ago period,” explains the reinsurer.

As a result of the above, in Q2 2019 Oxbridge Re’s combined ratio weakened from 73.1% to 311.8%, as a decline in net income driven by reduced net earned premiums failed to offset expenses.

The reinsurer’s net investment income reached $64,000 in the second-quarter, which was offset by $48,000 of change in fair value of equity securities.

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