Oxbridge Re renews reinsurance sidecar for 2019 despite losses of prior year

Cayman Islands based reinsurance firm Oxbridge Re Ltd. has successfully placed a new series of notes from its collateralized reinsurance sidecar vehicle Oxbridge Re NS Ltd. as part of its 2019 reinsurance renewal.

The sidecar note issuance has been successfully placed with investors despite the fact the sidecar faced a total loss in the prior year and participating investors lost all of their investments.

Oxbridge Re was hit hard by catastrophe events in the latter half of 2018, as hurricane Michael and the California wildfires both resulted in a hit to the investors in the reinsurers sidecar, with the vehicle facing a total loss.

But investor appetite while dampened slightly in 2019 has not disappeared and Oxbridge Re has been able to renew its Oxbridge Re NS Ltd. collateralized reinsurance sidecar with a fresh placement that will contribute to its catastrophe reinsurance protection through the coming year.

The reinsurer’s Oxbridge NS Re sidecar was licensed in 2018 and successfully issued a $2 million tranche of Series 2018-1 Participating Notes, in a private placement to third-party investors.

Oxbridge Re NS is the first insurance-linked securities (ILS) vehicle established by Oxbridge Re, but the Cayman Islands domiciled reinsurance firm said later in 2018 that the sidecar was set to take a portion of its losses from hurricane Michael.

Oxbridge Re said at the time that hurricane Michael’s losses could erode roughly 55% of principal from the reinsurance sidecar and a few months later also warned there could be some exposure to the California wildfires for its sidecar investors as well.

It later emerged that the sidecar paid out in full as the California wildfires eroded the remaining principal and investors lost their full allocations to Oxbridge Re NS Ltd.

But that hasn’t deterred Oxbridge Re from seeking to leverage the capital markets as part of its retrocessional reinsurance protection. Neither has it deterred capital market investors from allocating to its sidecar it seems.

Oxbridge Re has announced that it successfully placed its reinsurance program for the treaty year June 1st 2019 to May 31st 2020.

As part of this issuance a fresh tranche of sidecar notes has been issued and sold to investors as well.

Oxbridge Re NS Ltd. has issued a tranche of Series 2019-1 Participating Notes due June 1st 2022 in a private placement to investors, the reinsurer said.

The size of the sidecar issuance has not been revealed, but given the small size of last year’s and the fact Oxbridge Re is not a particularly large company yet, as well as the fact losses were dealt with in the sidecar’s first year, it’s unlikely to be particularly sizeable.

The proceeds of the sidecar issuance were deployed into a quota-share retrocessional reinsurance agreement with Oxbridge Reinsurance Limited, the company said.

“We are happy to report that we have successfully raised funds through our reinsurance side-car as well as deployed capital allocated in accordance with our underwriting strategy,” commented Jay Madhu chairman and chief executive officer of Oxbridge Re.

It’d good to see that Oxbridge Re has persisted with its sidecar and looks set to make it a core component of its retrocessional capital provisions. The issuances of notes will assist in its ongoing growth and provide it with access to efficient capacity to share its underwriting risks with.

For more details of reinsurance sidecar investments view our directory of collateralized reinsurance sidecar transactions.

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