HCI targets tokenized reinsurance capital support for Fortex Re, via Oxbridge Re’s SurancePlus

HCI Group, Inc., the insurance holding company, is tapping into the wave of interest in taking risk on-chain and issuing tokenized reinsurance securities as a way to access risk capital through a partnership with Oxbridge Re, that sees three tokens being offered to support risks held by its recently formed reinsurer Fortex Re.

Fortex Reinsurance SPC, Ltd., domiciled in the Cayman Islands, was recently formed and at the mid-year renewals selectively participated in HCI Group’s towers 1 and 3 of its reinsurance program.

Tower 1 provides reinsurance to HCI insurer Homeowners Choice, across central and southern regions of Florida, while tower 3 covers policies of entities Homeowners Choice, Tailrow and Condo Owners Reciprocal Exchange (CORE) across the northern region of Florida.

HCI Group secured $4.06 billion in aggregate excess of loss (XoL) reinsurance limit for the 2026/2027 treaty year, with Fortex Re a new addition to the program as the company expands its strategy in reinsurance, providing an efficient structure to access differentiated forms of collateralized capacity.

HCI’s exposure remains significantly Florida focused, although the company continues to expand its underwriting platforms into additional states across the US.

Now, it transpires that HCI is accessing reinsurance capital through three tranches of tokenized reinsurance securities, with Fortex Re acting as the conduit to cede risk to the capital and investors that will ultimately back the risk, working with Oxbridge Re and its subsidiary SurancePlus.

Recall that Oxbridge Re has been active in tokenized reinsurance for a while, but solely as a way to access investor capital to fund its collateralized reinsurance sidecar vehicle Oxbridge Re NS to-date.

HCI now appears to be set to becomes the first external cedant to these tokenized reinsurance arrangements.

Oxbridge Re and SurancePlus said they will launch three tokenized reinsurance securities that will provide investors with access to “synthetic contractual returns and catastrophe exposures based on the outcome of reinsurance contracts underwritten by HCI’s reinsurance subsidiary, Fortex Reinsurance SPC, Ltd. (“Fortex Re”) through Fortex Re’s segregated portfolios.”

SurancePlus is set to issue reinsurance-linked tokens utilising the Solana blockchain, through the Alphaledger platform.

The tokens will be named HCI Re 2026 Series A, HCI Re 2026 Series B, and HCI Re 2026 Series C and Oxbridge Re said that they target annualised investor returns of approximately 243%, 133% and 19%, respectively, assuming an underwriting loss free treaty period.

Those return assumptions are particularly high for the Series A and B tokenized securities, suggesting a commensurately high level of risk associated with them, but no information as to exactly where they attach in the reinsurance towers has been provided.

The offering of these tokens is expected to add around $12 million to the SurancePlus balance sheet as restricted assets, on the assumption the maximum subscription size for the offerings is achieved, the company explained.

The tokenized reinsurance assets are set to be exposed to and derive their returns from the outcome of excess-of-loss reinsurance contracts premiums and collateral associated with Fortex Re’s 2026-2027 reinsurance program.

Oxbridge Re said the transaction is expected to highlight “the potential for tokenization to expand the pool of capital available to insurance and reinsurance markets.”

Adding that, “By enabling broader participation from qualified investors, tokenized securities may complement traditional sources of reinsurance capital while creating a more direct connection between insurance risk and capital markets.”

A minimum investment size of $5,000 lowers the capital requirements associated with reinsurance investment participation, the company explained, and US investors that are eligible accredited investors under Rule 506(c) can participate, while non-U.S. investors participation will be pursuant to Regulation S of the U.S. Securities Act of 1933.

The transaction continues to demonstrate how on-chain technologies (blockchain) can enable investment into reinsurance risks using tokenized securities, with Oxbridge Re saying, “The offering seeks to create a more efficient connection between insurance risk and global capital markets while maintaining the underwriting discipline and risk management framework traditionally associated with the reinsurance industry.”

Jay Madhu, Chairman and CEO of Oxbridge and SurancePlus, commented on the news, “We believe blockchain technology is fundamentally changing how real-world assets are owned, distributed, and accessed. Tokenized securities bring together the innovation of blockchain with the protections and structure of traditional financial markets. Reinsurance is one of the largest and most established real-world asset (RWA) markets in the world, and our relationship with HCI Group and Fortex Re represents an important step in bringing reinsurance risk on-chain.”

These latest tokenized reinsurance securities issued by Oxbridge Re and its SurancePlus subsidiary mark a first step for the companies in bringing reinsurance investment opportunities to capital providers from outside of its own portfolios of risk.

HCI Group, via its Fortex Re entity, now looks set to become the first external cedant to access reinsurance capital via the on-chain infrastructure that Oxbridge Re has developed.