Oxbridge Re expects sidecar support for wildfire & Michael losses in Q4

Cayman Islands based reinsurance firm Oxbridge Re Ltd. said that its fully collateralized reinsurance sidecar vehicle Oxbridge Re NS Ltd. will support the firms losses from both hurricane Michael and the California wildfires in Q4 2018.

Oxbridge Re said that it now expects to suffer a $6 million impact from catastrophe losses in the fourth-quarter of 2018, largely driven by these two major events.

The reinsurer said that it expects to report $3.1 million in losses from hurricane Michael and $2.9 million in losses from the California Wildfires in its Q4 2018 results.

In each case this is after taking into consideration the quota-share reinsurance arrangement the reinsurer has through its collateralized sidecar vehicle, Oxbridge Re NS.

Oxbridge Re had previously revealed that it expected investors in its Oxbridge Re NS sidecar would face a roughly 55% loss of principal just from hurricane Michael.

The Oxbridge NS Re sidecar was licensed at mid-year 2018 and then successfully issued a $2 million Series 2018-1 tranche of Participating Notes, due June 1st 2021, in a private placement to third-party investors, to collateralize a quota-share reinsurance agreement with Oxbridge Reinsurance Limited.

Hurricane Michael was expected to cause noteholders in the sidecar a loss of principal of around $1.1 million  and a loss of income of $232,000, the company previously said.

Add in any impact and recoveries that Oxbridge Re can make from the sidecar for the California wildfire losses and it looks like the investors may provide further support for the company’s 2018 results.