Oxbridge Re’s sidecar on track to deliver ~40% returns to investors


Investors in Oxbridge Re NS Ltd., the fully collateralized reinsurance sidecar vehicle sponsored by Cayman Islands based reinsurance firm Oxbridge Re Ltd., are currently on track to earn a very healthy roughly 40% return for the current underwriting year.

oxbridge-re-logoAs we explained towards the end of 2019, the Oxbridge Re NS quota share reinsurance sidecar vehicle had managed to avoid any impact from major catastrophe events by that stage of the year, including the Japanese typhoons Faxai and Hagibis and also avoided losses from hurricane Dorian as well.

As a result, the sidecar looked like it was on course for a positive return for the 2019 underwriting year, which looked positive after it took a severe hit in 2018.

The Oxbridge Re NS sidecar enters into a retrocessional quota share arrangement with parent Oxbridge Re, so sharing in any losses suffered.

In its first year, the Oxbridge Re sponsored reinsurance sidecar vehicle faced a total loss, as the participating investors who backed the $2 million issuance in June 2018 lost all of their investments after major catastrophes.

Oxbridge Re’s portfolio was hit particularly hard in 2018 by catastrophe events in the second-half of the year, with hurricane Michael and the California wildfires both eroding sidecar investor capital resulting in the vehicle facing a total loss.

Oxbridge Re then launched its second reinsurance sidecar transaction in June 2019, when the firm sponsored a smaller $600,000 Oxbridge Re NS issuance.

That sidecar issuance has continued to run clean so far and now being outside of the season for its core peril of U.S. named storm, the company hopes it will continue to run clean through to the end of its risk period.

“While the contract year is not over, our sidecar investors are on track to earn an attractive return of approximately 40%,” Oxbridge Re Holdings President and Chief Executive Officer Jay Madhu said.

Adding, “We remain optimistic about the long-term prospects of our reinsurance business as we continue to evaluate additional opportunities for growth as well as diversification of risk.”

The reinsurance sidecar is set to be a focus for Oxbridge Re in the year ahead as well and the company will be hoping that after a very attractive roughly 40% return for the current year, its investor backers will commit more capital to allow it to grow the strategy for the 2020 wind season.

Madhu explained, “We will look to grow that portion of our business again this upcoming season beginning June 1, 2020.”

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

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