Blueprint
 
 
Prospectus Supplement Filed Pursuant to Rule 424(b)(3)
Registration No. 333-193577
 
 
PROSPECTUS SUPPLEMENT NO. 28
DATED AUGUST 14, 2017
(To Prospectus Declared Effective on February 28, 2014
and Dated March 21, 2014)
 
OXBRIDGE RE HOLDINGS LIMITED
 
Maximum of 4,884,650 Units
 
Minimum of 1,700,000 Units
 
Each Unit Consisting of One Ordinary Share and One Warrant
 
This Prospectus Supplement No. 28 supplements information contained in, and should be read in conjunction with, that certain Prospectus, dated March 21, 2014, of Oxbridge Re Holdings Limited, as supplemented by that certain Prospectus Supplement No. 1 through No. 27 thereto, relating to the offer and sale by us of up to 4,884,650 units, each unit consisting of one ordinary share and one warrant. This Prospectus Supplement No. 28 is not complete without, and may not be delivered or used except in connection with, the original Prospectus and Supplement No. 1 through No. 27 thereto.
 
This Prospectus Supplement No. 28 includes the following document, as filed by us with the Securities and Exchange Commission:
 
The attached Quarterly Report on Form 10-Q of Oxbridge Re Holdings Limited, as filed with the Securities and Exchange Commission on August 14, 2017.
 
Our units began trading on the Nasdaq Capital Market under the symbol “OXBRU.” When the units were split into their component parts, the units ceased trading and our ordinary shares and warrants began trading separately on the Nasdaq Capital Market under the symbols “OXBR” and “OXBRW” respectively.
 
The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities or determined if this Prospectus Supplement No. 28 (or the original Prospectus or Supplement No. 1 through No. 27 thereto) is truthful or complete. Any representation to the contrary is a criminal offense.
 
 
The date of this Prospectus Supplement No. 28 is August 14, 2017.
 
 
 

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2017
 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from __________ to __________
 
Commission File Number: 1-36346
 
OXBRIDGE RE HOLDINGS LIMITED
(Exact name of registrant as specified in its charter)
 
Cayman Islands
 
98-1150254
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
Strathvale House, 2nd Floor90 North Church Street, Georgetown P.O. Box 469
Grand Cayman, Cayman Islands
 
KY1-9006
(Address of principal executive offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code: (345) 749-7570
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
Yes             ☒
 
No            ☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
Yes             ☒
 
No            ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer                         ☐
 
Accelerated filer                                        ☐
Non-accelerated filer                           ☐
 
Smaller reporting company                       ☒
Emerging growth company                 ☒
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ______
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes            ☐
 
No            ☒
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
As of August 8, 2017; 5,786,562 ordinary shares, par value $0.001 per share, were outstanding.
 

 
 
 
OXBRIDGE RE HOLDINGS LIMITED
 
INDEX
 
 
PART I – FINANCIAL INFORMATION
Page
 
 
 
Item 1.
Financial Statements
 
 
 
 
 
Consolidated Balance Sheets June 30, 2017 (unaudited) and December 31, 2016
3
 
 
 
 
Consolidated Statements of Income Three and Six Months Ended June 30, 2017 and 2016 (unaudited)
4
 
 
 
 
Consolidated Statements of Comprehensive Income Three and Six Months Ended June 30, 2017 and 2016 (unaudited)
5
 
 
 
 
Consolidated Statements of Cash Flows Six Months Ended June 30, 2017 and 2016 (unaudited)
6
 
   
 
 
Consolidated Statements of Changes in Shareholders’ Equity Six Months Ended June 30, 2017 and 2016 (unaudited)
8
 
   
 
 
Notes to Consolidated Financial Statements (unaudited) 
9
 
 
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
33
 
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
44
 
 
 
Item 4.
Controls and Procedures 
44
 
 
PART II – OTHER INFORMATION
 
 
 
 
Item 1.
Legal Proceedings 
44
 
 
 
Item 1A.
Risk Factors 
44
 
 
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
44
 
 
 
Item 3.
Defaults Upon Senior Securities 
46
 
 
 
Item 4.
Mine Safety Disclosures 
46
 
 
 
Item 5.
Other Information 
46
 
 
 
Item 6.
Exhibits 
46
 
 
 
 
Signatures 
47
 
 
 
 
 
2
 
PART I - FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Consolidated Balance Sheets
(expressed in thousands of U.S. Dollars, except per share and share amounts)
 
 
 
At June 30,
2017
 
 
At December 31, 2016
 
 
 
(Unaudited)
 
 
 
 
Assets
 
 
 
 
 
 
Investments:
 
 
 
 
 
 
Fixed-maturity securities, available for sale, at fair value (amortized cost: $10,006 and $6,060, respectively)
 $10,007 
  6,051 
Equity securities, available for sale, at fair value (cost: $5,719 and $5,343, respectively)
  5,399 
  4,941 
       Total investments
  15,406 
  10,992 
Cash and cash equivalents
  5,758 
  12,242 
Restricted cash and cash equivalents
  26,496 
  23,440 
Accrued interest and dividend receivable
  56 
  48 
Premiums receivable
  12,112 
  4,038 
Deferred policy acquisition costs
  537 
  88 
Unearned premiums ceded
  733 
  - 
Prepayment and other receivables
  151 
  98 
Property and equipment, net
  49 
  54 
  Total assets
 $61,298 
  51,000 
 
    
    
Liabilities and Shareholders’ Equity
    
    
Liabilities:
    
    
Reserve for losses and loss adjustment expenses
 $3,043 
  8,702 
Loss experience refund payable
  2,730 
  1,470 
Losses payable
  1,467 
  - 
Unearned premiums reserve
  16,276 
  3,461 
Accounts payable and other liabilities
  152 
  204 
  Total liabilities
  23,668 
  13,837 
 
    
    
Shareholders’ equity:
    
    
Ordinary share capital, (par value $0.001, 50,000,000 shares authorized; 5,806,334 and 5,916,149 shares issued and outstanding)
  6 
  6 
Additional paid-in capital
  32,426 
  33,034 
Retained earnings
  5,517 
  4,534 
Accumulated other comprehensive loss
  (319)
  (411)
Total shareholders’ equity
  37,630 
  37,163 
Total liabilities and shareholders’ equity
 $61,298 
  51,000 
 
The accompanying Notes to Consolidated Financial Statements are an integral
part of the Consolidated Financial Statements.
 
 
3
 
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
 Consolidated Statements of Income
(Unaudited)
(expressed in thousands of U.S. Dollars, except per share and share amounts)
 
 
 
Three Months Ended
 
 
Six Months Ended  
 
 
 
June 30,    
 
 
June 30,    
 
 
 
2017  
 
 
2016
 
 
2017  
 
 
2016
 
 
 
(Unaudited)
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Assumed premiums $
 $17,376 
  14,562 
 $18,256 
  15,065 
Premiums ceded
  (147)
  - 
  (147)
  - 
Change in loss experience refund payable
  (512)
  (289)
  (1,260)
  (2,377)
Change in unearned premiums reserve
  (14,231)
  (10,927)
  (12,815)
  (7,961)
 
    
    
    
    
Net premiums earned
  2,486 
  3,346 
  4,034 
  4,727 
Net realized investment gains
  46 
  77 
  48 
  133 
Net investment income
  127 
  109 
  213 
  203 
 
    
    
    
    
Total revenue
  2,659 
  3,532 
  4,295 
  5,063 
   
    
    
    
    
Expenses
    
    
    
    
Losses and loss adjustment expenses
  1,059 
  2,215 
  1,027 
  2,278 
Policy acquisition costs and underwriting expenses
  94 
  68 
  158 
  129 
General and administrative expenses
  390 
  377 
  724 
  741 
   
    
    
    
    
Total expenses
  1,543 
  2,660 
  1,909 
  3,148 
   
    
    
    
    
Net income
 $1,116 
  872 
 $2,386 
  1,915 
 
    
    
    
    
 
    
    
    
    
Earnings per share
    
    
    
    
Basic and Diluted
 $0.19 
  0.14 
 $0.41 
  0.32 
 
    
    
    
    
 
    
    
    
    
Dividends paid per share
 $0.12 
  0.12 
 $0.24 
  0.24 

The accompanying Notes to Consolidated Financial Statements are an integral
part of the Consolidated Financial Statements.
 
 
4
 
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
 Consolidated Statements of Comprehensive Income
(Unaudited)
(expressed in thousands of U.S. Dollars)
 
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
June 30,    
 
 
June 30,    
 
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 $1,116 
  872 
 $2,386 
  1,915 
Other comprehensive income:
    
    
    
    
Change in unrealized loss on investments:
    
    
    
    
Unrealized gain arising during the period
  181 
  632 
  140 
  976 
Reclassification adjustment for net realized gains included in net income
  (46)
  (77)
  (48)
  (133)
 
    
    
    
    
Net change in unrealized loss
  135 
  555 
  92
 
  843 
 
    
    
    
    
Total other comprehensive income
  135 
  555 
  92
 
  843 
 
    
    
    
    
Comprehensive income
 $1,251 
  1,427 
 $2,478
 
  2,758 
 
The accompanying Notes to Consolidated Financial Statements are an integral
part of the Consolidated Financial Statements.
 
 
5
 
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
 Consolidated Statements of Cash Flows
(Unaudited)
(expressed in thousands of U.S. Dollars)
 
 
 
  Six Months Ended    
 
 
 
  June 30,    
 
 
 
2017  
 
 
2016
 
Operating activities
 
 
 
 
 
 
Net income
 $2,386 
  1,915 
Adjustments to reconcile net income to net cash provided by operating activities:
    
    
Stock-based compensation
  63 
  60 
Net amortization of premiums on investments in fixed-maturity securities
  42 
  - 
Depreciation and amortization
  11 
  10 
Net realized investment gains
  (48)
  (133)
Change in operating assets and liabilities:
    
    
Accrued interest and dividend receivable
  (8)
  (31)
Premiums receivable
  (8,074)
  (5,489)
Deferred policy acquisition costs
  (449)
  (155)
Unearned premiums ceded
  (733)
  - 
Prepayment and other receivables
  (53)
  (39)
Reserve for losses and loss adjustment expenses
  (5,659)
  2,250 
Loss experience refund payable
  1,260 
  (5,184)
Losses payable
  1,467 
  - 
Unearned premiums reserve
  12,815 
  7,962 
Accounts payable and other liabilities
  (52)
  17 
 
    
    
Net cash provided by operating activities
 $2,968 
  1,183 
 
    
    
Investing activities
    
    
Change in restricted cash and cash equivalents
  (3,056)
  (194)
Purchase of fixed-maturity securities
  (3,987)
  (3,111)
Purchase of equity securities
  (10,007)
  (5,525)
Proceeds from sale of fixed-maturity and equity securities
  9,678 
  5,237 
Purchase of property and equipment
  (6)
  (1)
 
    
    
Net cash used in investing activities
 $(7,378)
  (3,594)
 
    
    
Financing activities
    
    
Repurchases of common stock under share repurchase plan
  (671)
 (60)
Dividends paid
  (1,403)
  (1,455)
 
    
    
Net cash used in financing activities
 $(2,074)
  (1,515)
 
(continued)
 
 
6
 
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
 Consolidated Statements of Cash Flows, continued
(Unaudited)
(expressed in thousands of U.S. Dollars)
 
 
 
  Six Months Ended    
 
 
 
  June 30,    
 
 
 
2017  
 
 
2016
 
 
 
 
 
 
 
 
Net change in cash and cash equivalents
  (6,484)
     (3,926)
Cash and cash equivalents at beginning of period
  12,242 
  8,584 
 
    
    
Cash and cash equivalents at end of period
 $5,758 
 4,658
 
    
    
Supplemental disclosure of cash flow information
    
    
Interest paid
  - 
  - 
Income taxes paid
  - 
  - 
 
    
    
Non-cash investing activities
    
    
Net change in unrealized loss on securities available for sale
 
#REF!
 
  843 
 
    
    
 
The accompanying Notes to Consolidated Financial Statements are an integral
part of the Consolidated Financial Statements.
 
 
7
 
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Consolidated Statements of Changes in Shareholders’ Equity (unaudited)
  Six Months Ended June 30, 2017 and 2016
(expressed in thousands of U.S. Dollars, except per share and share amounts)
 
 
 
Ordinary Share Capital
 
 
 
 
 
Additional
Paid-in
 
 
Retained
 
 
Accumulated Other Comprehensive
 
 
Total Shareholders'
 
 
 
Shares
 
 
Amount
 
 
Capital
 
 
Earnings
 
 
  Loss
 
 
Equity
 
Balance at December 31, 2015
  6,060,000 
  6 
  33,657 
  4,838 
  (1,474)
  37,027 
Cash dividends paid
  - 
  - 
  - 
  (1,455)
  - 
  (1,455)
Repurchase and retirement of common stock under share repurchase plan
  (11,530)
  - 
  (60)
  - 
  - 
  (60)
Net income for the period
  - 
  - 
  - 
  1,915 
  - 
  1,915 
Stock-based compensation
  - 
  - 
  60 
  - 
  - 
  60 
Total other comprehensive income
  - 
  - 
  - 
  - 
  843 
  843 
Balance at June 30, 2016
  6,048,470 
  6 
  33,657 
  5,298 
  (631)
  38,330 
 
    
    
    
    
    
    
 
    
    
    
    
    
    
Balance at December 31, 2016
  5,916,149 
  6 
  33,034 
  4,534 
  (411)
  37,163 
Cash dividends paid
  - 
  - 
  - 
  (1,403)
  - 
  (1,403)
Repurchase and retirement of common stock under share repurchase plan
  (109,815)
  - 
  (671)
  - 
  - 
  (671)
Net income for the period
  - 
  - 
  - 
  2,386 
  - 
  2,386 
Stock-based compensation
  - 
  - 
  63 
  - 
  - 
  63 
Total other comprehensive income
  - 
  - 
  - 
  - 
  92 
  92 
Balance at June 30, 2017
  5,806,344 
  6 
  32,426 
  5,517 
  (319)
  37,630 
 
The accompanying Notes to Consolidated Financial Statements are an integral
part of the Consolidated Financial Statements.
 
 
8
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
1.
ORGANIZATION AND BASIS OF PRESENTATION
 
(a)
Organization
 
Oxbridge Re Holdings Limited was incorporated as an exempted company on April 4, 2013 under the laws of the Cayman Islands. Oxbridge Re Holdings Limited owns 100% of the equity interest in Oxbridge Reinsurance Limited (the “Subsidiary”), an entity incorporated on April 23, 2013 under the laws of the Cayman Islands and for which a Class “C” Insurer’s license was granted on April 29, 2013 under the provisions of the Cayman Islands Insurance Law. Oxbridge Re Holdings Limited and the Subsidiary (collectively, the “Company”) have their registered offices at P.O. Box 309, Ugland House, Grand Cayman, Cayman Islands.
 
The Company’s ordinary shares and warrants are listed on The NASDAQ Capital Market under the symbols “OXBR” and “OXBRW,” respectively.
 
The Company operates as a single business segment through the Subsidiary, which provides collateralized reinsurance to cover excess of loss catastrophe risks of various affiliated and non-affiliated ceding insurers, including Claddaugh Casualty Insurance Company, Ltd. (“Claddaugh”) and Homeowners Choice Property & Casualty Insurance Company (“HCPCI”), which are related-party entities domiciled in Bermuda and Florida, respectively.
 
(b)
Basis of Presentation
 
The accompanying unaudited, consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying interim consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s consolidated financial position as of June 30, 2017 and the consolidated results of operations and cash flows for the periods presented. The consolidated results of operations for interim periods are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ended December 31, 2017. The accompanying unaudited consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2016 included in the Company’s Form 10-K, which was filed with the SEC on March 13, 2017.
 
In preparing the interim unaudited consolidated financial statements, management was required to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the financial reporting date and throughout the periods being reported upon. Certain of the estimates result from judgments that can be subjective and complex and consequently actual results may differ from these estimates, which would be reflected in future periods.
 
 
9
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the reserve for losses and loss adjustment expenses, which include amounts estimated for claims incurred but not yet reported. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make these estimates. In addition, accounting policies specific to valuation of investments, assessment of other-than-temporary impairment (“OTTI”) and loss experience refund payable involve significant judgments and estimates material to the Company’s consolidated financial statements. Although considerable variability is likely to be inherent in these estimates, management believes that the amounts provided are reasonable. These estimates are continually reviewed and adjusted if necessary. Such adjustments are reflected in current operations.
 
All significant intercompany balances and transactions have been eliminated.
 
2.
SIGNIFICANT ACCOUNTING POLICIES
 
Cash and cash equivalents: Cash and cash equivalents are comprised of cash and short term investments with original maturities of three months or less.
 
Restricted cash and cash equivalents: Restricted cash and cash equivalents represent funds held in accordance with the Company’s trust agreements with ceding insurers and trustees, which requires the Company to maintain collateral with a market value greater than or equal to the limit of liability, less unpaid premium.
 
Investments: The Company’s investments consist of fixed-maturity securities and equity securities, and are classified as available-for-sale. The Company’s investments are carried at fair value with changes in fair value included as a separate component of accumulated other comprehensive loss in shareholders’ equity.
 
Unrealized gains or losses are determined by comparing the fair market value of the securities with their cost or amortized cost. Realized gains and losses on investments are recorded on the trade date and are included in the consolidated statements of income. The cost of securities sold is based on the specified identification method. Investment income is recognized as earned and discounts or premiums arising from the purchase of debt securities are recognized in investment income using the interest method over the remaining term of the security.
 
The Company reviews all securities for other-than-temporary impairment ("OTTI") on a quarterly basis and more frequently when economic or market conditions warrant such review. When the fair value of any investment is lower than its cost, an assessment is made to see whether the decline is temporary of other-than-temporary. If the decline is determined to be other-than-temporary the investment is written down to fair value and an impairment charge is recognized in income in the period in which the Company makes such determination. For a debt security that the Company does not intend to sell nor is it more likely than not that the Company will be required to sell before recovery of its amortized cost, only the credit loss component is recognized in income, while impairment related to all other factors is recognized in other comprehensive income. The Company considers various factors in determining whether an individual security is other-than-temporarily impaired (see Note 4).
 
 
10
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
Fair value measurement: GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under GAAP are as follows:
 
Level 1
Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date;
 
 
Level 2
Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active; and
 
 
Level 3
Inputs that are unobservable.
 
Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market participants use to make valuation decisions, including assumptions about risk. For debt securities, inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, broker quotes for similar securities and other factors. The fair value of investments in common stocks and exchange-traded funds is based on the last traded price. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Company’s investment custodians. The investment custodians consider observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant markets. The categorization of a financial instrument within the hierarchy is based upon the pricing transparency of the instrument.
 
Deferred policy acquisition costs (“DAC”): Policy acquisition costs consist of brokerage fees, federal excise taxes and other costs related directly to the successful acquisition of new or renewal insurance contracts, and are deferred and amortized over the terms of the reinsurance agreements to which they relate. The Company evaluates the recoverability of DAC by determining if the sum of future earned premiums and anticipated investment income is greater than the expected future claims and expenses. If a loss is probable on the unexpired portion of policies in force, a premium deficiency loss is recognized. At June 30, 2017, the DAC was considered fully recoverable and no premium deficiency loss was recorded.
 
 
11
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
Property and equipment:  Property and equipment are recorded at cost when acquired. Property and equipment are comprised of motor vehicles, furniture and fixtures, computer equipment and leasehold improvements and are depreciated, using the straight-line method, over their estimated useful lives, which are five years for furniture and fixtures and computer equipment and four years for motor vehicles. Leasehold improvements are amortized over the lesser of the estimated useful lives of the assets or remaining lease term. The Company periodically reviews property and equipment that have finite lives, and that are not held for sale, for impairment by comparing the carrying value of the assets to their estimated future undiscounted cash flows. For the three and six-month periods ended June 30, 2017, there were no impairments in property and equipment.
 
Allowance for uncollectible receivables: Management evaluates credit quality by evaluating the exposure to individual counterparties; where warranted management also considers the credit rating or financial position, operating results and/or payment history of the counterparty. Management establishes an allowance for amounts for which collection is considered doubtful. Adjustments to previous assessments are recognized as income in the year in which they are determined. At June 30, 2017, no receivables were determined to be overdue or impaired and, accordingly, no allowance for uncollectible receivables has been established.
 
Reserves for losses and loss adjustment expenses: The Company determines its reserves for losses and loss adjustment expenses on the basis of the claims reported by the Company’s ceding insurers and for losses incurred but not reported (“IBNR”), management uses the assistance of an independent actuary. The reserves for losses and loss adjustment expenses represent management’s best estimate of the ultimate settlement costs of all losses and loss adjustment expenses. Management believes that the amounts are adequate; however, the inherent impossibility of predicting future events with precision, results in uncertainty as to the amount which will ultimately be required for the settlement of losses and loss expenses, and the differences could be material. Adjustments are reflected in the consolidated statements of income in the period in which they are determined.
 
Loss experience refund payable: Certain contracts include retrospective provisions that adjust premiums or result in profit commissions in the event losses are minimal or zero. In accordance with GAAP, the Company will recognize a liability in the period in which the absence of loss experience obligates the Company to pay cash or other consideration under the contracts. On the contrary, the Company will derecognize such liability in the period in which a loss experience arises. Such adjustments to the liability, which accrue throughout the contract terms, will reduce the liability should a catastrophic loss event covered by the Company occur.
 
 
12
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
Premiums assumed: The Company records premiums assumed, net of loss experience refunds, as earned pro-rata over the terms of the reinsurance agreements and the unearned portion at the consolidated balance sheet date is recorded as unearned premiums reserve. A reserve is made for estimated premium deficiencies to the extent that estimated losses and loss adjustment expenses exceed related unearned premiums. Investment income is not considered in determining whether or not a deficiency exists.
 
Subsequent adjustments of premiums assumed, based on reports of actual premium by the ceding companies, or revisions in estimates of ultimate premium, are recorded in the period in which they are determined. Such adjustments are generally determined after the associated risk periods have expired, in which case the premium adjustments are fully earned when assumed.
 
Certain contracts allow for reinstatement premiums in the event of a full limit loss prior to the expiration of the contract. A reinstatement premium is not due until there is a full limit loss event and therefore, in accordance with GAAP, the Company records a reinstatement premium as written only in the event that the reinsured incurs a full limit loss on the contract and the contract allows for a reinstatement of coverage upon payment of an additional premium. For catastrophe contracts which contractually require the payment of a reinstatement premium equal to or greater than the original premium upon the occurrence of a full limit loss, the reinstatement premiums are earned over the original contract period. Reinstatement premiums that are contractually calculated on a pro-rata basis of the original premiums are earned over the remaining coverage period.
 
Unearned Premiums Ceded: The Company reduces the risk of future losses on business assumed by reinsuring certain risks and exposures with other reinsurers (retrocessionaires). The Company remains liable to the extent that any retrocessionaire fails to meet its obligations and to the extent that the Company does not hold sufficient security for their unpaid obligations.
 
Ceded premiums are written and are expensed pro-rata over the contract period in proportion to the period of protection. Unearned premiums ceded consist of the unexpired portion of the reinsurance obtained.
 
Uncertain income tax positions: The authoritative GAAP guidance on accounting for, and disclosure of, uncertainty in income tax positions requires the Company to determine whether an income tax position of the Company is more likely than not to be sustained upon examination by the relevant tax authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For income tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements, if any, is reduced by the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. The application of this authoritative guidance has had no effect on the Company’s consolidated financial statements because the Company had no uncertain tax positions at June 30, 2017.
 
 
13
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
Earnings per share: Basic earnings per share has been computed on the basis of the weighted-average number of ordinary shares outstanding during the periods presented. Diluted earnings per share is computed based on the weighted-average number of ordinary shares outstanding and reflects the assumed exercise or conversion of diluted securities, such as stock options and warrants, computed using the treasury stock method.
 
Stock-Based Compensation: The Company accounts for stock-based compensation under the fair value recognition provisions of GAAP which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors, including stock options and restricted stock issuances based on estimated fair values. The Company measures compensation for restricted stock based on the price of the Company’s ordinary shares at the grant date. Determining the fair value of share purchase options at the grant date requires significant estimation and judgment. The Company uses an option-pricing model (Black-Scholes option pricing model) to assist in the calculation of fair value for share purchase options. The Company's shares have not been publicly traded for a sufficient length of time to solely use the Company's performance to reasonably estimate the expected volatility. Therefore, when estimating the expected volatility, the Company takes into consideration the historical volatility of similar entities. The Company considers factors such as an entity's industry, stage of life cycle, size and financial leverage when selecting similar entities. The Company uses a sample peer group of companies in the reinsurance industry as well as the Company’s own historical volatility in determining the expected volatility. Additionally, the Company uses the full life of the options, ten years, as the estimated term of the options, and has assumed no forfeitures during the life of the options.
 
The Company uses the straight-line attribution method for all grants that include only a service condition. Compensation expense related to all awards is included in general and administrative expenses. 
 
Recent accounting pronouncements:
 
Accounting Standards Update No. 2016-18. In November 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Updated ("ASU") 2016-18, “Statements of Cash Flows - Restricted Cash (Topic 230)” (“ASU 2016-18”). ASU 2016-18 requires restricted cash and cash equivalents to be included with cash and cash equivalents in the consolidated statement of cash flows and disclose the nature of the restrictions on cash and cash equivalents. ASU 2016-18 is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company currently separately discloses the restrictions on cash and cash equivalents in Note 3 of the consolidated financial statements and expects to continue these disclosures since ASU 2016-18 does not change the requirement in Regulation S-X (Rule 5-02) to separately disclose cash and cash equivalents that have restrictions on withdrawal or use. The Company currently presents changes in restricted cash and cash equivalents under investing activities in the consolidated statements of cash flows. Upon adoption of ASU 2016-18, the Company will amend the presentation in the consolidated statements of cash flows to include the restricted cash and cash equivalents with cash and cash equivalents in the consolidated statements of cash flows and will retrospectively reclassify all periods presented.
 
 
14
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
Accounting Standards Update No. 2016-13. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 amends the guidance on reporting credits losses and affects loans, debt securities, trade receivables, reinsurance recoverables and other financial assets that have the contractual right to receive cash. The amendments are effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods. Early adoption is permitted for any organization for annual periods beginning after December 15, 2018 and interim periods within those annual periods. The Company is in the process of evaluating the impact of the requirements of ASU 2016-13 on the Company’s consolidated financial statements and anticipates implementing ASU 2016-13 during the first quarter of fiscal year 2020.
 
Accounting Standards Update No. 2016-09. In March 2016, the FASB issued ASU No. 2016-09, "Compensation-Stock Compensation (Topic 718)," which affects all entities that issue share-based awards to their employees. Among the amendments affecting share-based payment transactions are their income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for all public entities for reporting periods beginning after December 15, 2016 and interim periods within those fiscal years. Early adoption is permitted for all entities. The Company does not expect a material impact of this guidance on the Company’s consolidated financial statements.
 
Accounting Standards Update No. 2016-02. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," which supersedes Topic 840 and creates the new lease accounting standards for lessees and lessors, primarily related to the recognition of lease assets and liabilities by lessees for leases classified as operating leases. ASU 2016-02 is effective for all public entities for reporting periods beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted for all entities. The Company is currently evaluating the impact of this guidance on the Company’s consolidated financial statements.
 
Accounting Standards Update No. 2016-01. In January 2016, the FASB issued ASU 2016-01, "Financial Instruments (Subtopic 825-10)," which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. One of the changes is to require certain equity investments to be measured at fair value with changes in fair value recognized in net income. ASU 2016-01 is effective for all public entities for reporting periods beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The Company is currently evaluating the impact of this guidance on the Company’s consolidated financial statements.
 
Accounting Standards Update No. 2017-08. In March 2017, the FASB issued ASU No. 2017-08, "Premium Amortization on Purchased Callable Debt Securities," to amend the amortization period for certain purchased callable debt securities held at a premium.  Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument.  The amendments in this update require the premium to be amortized to the earliest call date.  No accounting change is required for securities held at a discount.  For public business entities, the amendments in this update become effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments in this update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.
 
        Accounting Standards Update No. 2017-09. In May 2017, the FASB issued ASU 2017-09, "Scope of Modification Accounting," to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation, to a change to the terms or conditions of a share-based payment award.  The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; (3) the  classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this update.  For public business entities, the amendments in this update become effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. An entity should apply the amendments in this update prospectively to an award modified on or after the adoption date. The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements, but it is not expected to have a material impact.
 
 
15
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
Segment Information: Under GAAP, operating segments are based on the internal information that management uses for allocating resources and assessing performance as the source of the Company’s reportable segments. The Company manages its business on the basis of one operating segment, Property and Casualty Reinsurance, in accordance with the qualitative and quantitative criteria established under GAAP.
 
Reclassifications: Certain reclassifications of prior period amounts have been made to conform to the current period presentation.
 
3. CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS
 
 
 
At June 30,
 
 
At December 31,
 
 
 
2017  
 
 
2016
 
 
 
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
Cash on deposit
 $398 
 $6,868 
Cash held with custodians
  5,360 
  5,374 
Restricted cash held in trust
  26,496 
  23,440 
 
    
    
Total
  32,254 
  35,682 
 
Cash and cash equivalents are held by large and reputable counterparties in the United States of America and in the Cayman Islands. Restricted cash held in trust is custodied with Bank of New York Mellon and Wells Fargo Bank and is held in accordance with the Company’s trust agreements with the ceding insurers and trustees, which require that the Company provide collateral having a market value greater than or equal to the limit of liability, less unpaid premium.
 
 
 
16
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
4. INVESTMENTS
 
The Company holds investments in fixed-maturity securities and equity securities that are classified as available-for-sale. At June 30, 2017 and December 31, 2016, the cost or amortized cost, gross unrealized gains and losses, and estimated fair value of the Company’s available-for-sale securities by security type were as follows:
 
 
 
Cost or
 
 
Gross
 
 
Gross
 
 
Estimated
 
 
 
Amortized
 
 
Unrealized
 
 
Unrealized
 
 
Fair  
 
 
 
Cost
 
 
Gain
 
 
Loss  
 
 
Value ($000)
 
 
 
($ in thousands)                        
 
As of June 30, 2017
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency securities
 $10,006 
 $28 
 $(27)
 $10,007 
 
    
    
    
    
 
    
    
    
    
Total fixed-maturity securities
  10,006 
  28 
  (27)
  10,007 
 
    
    
    
    
Mutual funds
  602 
  9 
  (3)
  608 
Preferred stocks
  895 
  27 
  (3)
  919 
Common stocks
  4,222 
  16 
  (366)
  3,872 
 
    
    
    
    
Total equity securities
  5,719 
  52 
  (372)
  5,399 
 
    
    
    
    
 
    
    
    
    
Total available for sale securities
 $15,725 
 $80 
 $(399)
 $15,406 
 
    
    
    
    
 
    
    
    
    
As of December 31, 2016
    
    
    
    
Fixed-maturity securities
    
    
    
    
U.S. Treasury and agency securities
 $6,060 
 $28 
 $(37)
 $6,051 
 
    
    
    
    
 
    
    
    
    
Total fixed-maturity securities
  6,060 
  28 
  (37)
  6,051 
 
    
    
    
    
Mutual funds
  400 
  2 
  (6)
  396 
Preferred stocks
  687 
  8 
  (4)
  691 
Common stocks
  4,256 
  126 
  (528)
  3,854 
 
    
    
    
    
Total equity securities
  5,343 
  136 
  (538)
  4,941 
 
    
    
    
    
 
    
    
    
    
Total available for sale securities
 $11,403 
 $164 
 $(575)
 $10,992 
 
At June 30, 2017 and December 31, 2016, available-for-sale securities with fair value of $7,451,000 and $3,502,000, respectively, are held in trust accounts as collateral under reinsurance contacts with the Company’s ceding insurers.
 
 
17
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
4. 
INVESTMENTS (continued)
 
Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without penalties. The scheduled contractual maturities of fixed-maturity securities at June 30, 2017 and December 31, 2016 are as follows:
 
 
 
Amortized
 
 
Estimated
 
 
 
Cost
 
 
Fair Value
 
 
 
($ in thousands)
 
As of June 30, 2017
 
 
 
 
 
 
Available for sale
 
 
 
 
 
 
Due within one year
 $6,019 
  6,023 
Due after one year through five years
  3,987 
  3,984 
 
    
    
 
 $10,006 
 $10,007 
 
    
    
 
    
    
As of December 31, 2016
    
    
Available for sale
    
    
Due within one year
 $2,970 
 $2,998 
Due after one year through five years
  3,090 
  3,053 
 
    
    
 
 $6,060 
 $6,051 
 
Proceeds received, and the gross realized gains and losses from sales of available-for-sale securities, for the three and six months ended June 30, 2017 and 2016 were as follows:
 
 
 

 
 
Gross
 
 
Gross
 
 
 
   Gross proceeds
 
 
Realized
 
 
Realized
 
 
 
    from sales
 
 
Gains
 
 
Losses
 
 
 
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2017
 
 
 
 
 
 
 
 
 
Fixed-maturity securities
 $- 
 $- 
 $- 
 
    
    
    
Equity securities
 $6,101 
 $540 
 $(494)
 
    
    
    
 
    
    
    
Six Months Ended June 30, 2017
    
    
    
Fixed-maturity securities
 $- 
 $- 
 $- 
 
    
    
    
Equity securities
 $9,678 
 $732 
 $(684)
 
    
    
    
 
    
    
    
Three Months Ended June 30, 2016
    
    
    
Fixed-maturity securities
 $119 
 $8 
 $- 
 
    
    
    
Equity securities
 $3,670 
 $310 
 $(241)
 
    
    
    
 
    
    
    
Six Months Ended June 30, 2016
    
    
    
Fixed-maturity securities
 $119 
 $8 
 $- 
 
    
    
    
Equity securities
 $5,118 
 $498 
 $(373)
 
 
18
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
4. 
INVESTMENTS (continued)
 
The Company regularly reviews its individual investment securities for OTTI. The Company considers various factors in determining whether each individual security is other-than-temporarily impaired, including:
 
the financial condition and near-term prospects of the issuer, including any specific events that may affect its operations or income;
 
the length of time and the extent to which the market value of the security has been below its cost or amortized cost;
 
general market conditions and industry or sector specific factors;
 
nonpayment by the issuer of its contractually obligated interest and principal payments; and
 
the Company’s intent and ability to hold the investment for a period of time sufficient to allow for the recovery of costs.
 
Securities with gross unrealized loss positions at June 30, 2017 and December 31, 2016, aggregated by investment category and length of time the individual securities have been in a continuous loss position, are as follows:
 
 
 
Less Than Twelve
 
 
Twelve Months or
 
 
           
 
 
 
Months
 
 
Greater
 
 
Total
 
 
 
Gross
 
 
Estimated
 
 
Gross
 
 
Estimated
 
 
Gross  
 
 
Estimated
 
 
 
Unrealized
 
 
Fair  
 
 
Unrealized
 
 
Fair  
 
 
Unrealized
 
 
Fair  
 
As of June 30, 2017
 
Loss
 
 
Value
 
 
Loss  
 
 
Value
 
 
Loss  
 
 
Value
 
 
 
($ in thousands)
 
 
($ in thousands)
 
 
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency securities
  3 
  3,984 
  24 
  3,025 
  27 
  7,009 
 
    
    
    
    
    
    
Total fixed-maturity securities
  3 
  3,984 
  24 
  3,025 
  27 
  7,009 
 
    
    
    
    
    
    
Equity securities
    
    
    
    
    
    
Mutual funds
  3 
  199 
  - 
  - 
  3 
  199 
Preferred stocks
  3 
  398 
  - 
  - 
  3 
  398 
All other common stocks
 141
 1,651
 225
 1,298
  366 
  2,949 
 
    
    
    
    
    
    
Total equity securities
    147
    2,248
    225
    1,298
  372 
  3,546 
 
    
    
    
    
    
    
 
    
    
    
    
    
    
Total available for sale securities
 $150
 $6,232
 $249
 $4,323
 $399 
 $10,555 
 
At June 30, 2017, there were 21 securities in an unrealized loss position of which 5 of these positions had been in an unrealized loss position for 12 months or greater.
 
 
19
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
4. 
INVESTMENTS (continued)
 
 
 
Less Than Twelve
 
 
Twelve Months or
 
 
           
 
 
 
Months
 
 
Greater
 
 
  Total  
 
 
 
Gross
 
 
Estimated
 
 
Gross
 
 
Estimated
 
 
Gross  
 
 
Estimated
 
 
 
Unrealized
 
 
Fair  
 
 
Unrealized
 
 
Fair  
 
 
Unrealized
 
 
Fair  
 
As of December 31, 2016
 
Loss
 
 
Value
 
 
Loss  
 
 
Value
 
 
Loss  
 
 
Value
 
 
 
($ in thousands)
 
 
($ in thousands)        
 
 
($ in thousands)        
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and agency securities
  37 
  3,053 
  - 
  - 
  37 
  3,053 
 
    
    
    
    
    
    
Total fixed-maturity securities
  37 
  3,053 
  - 
  - 
  37 
  3,053 
 
    
    
    
    
    
    
Equity securities
    
    
    
    
    
    
Mutual funds
  6 
  193 
  - 
  - 
  6 
  193 
Preferred stocks
  4 
  396 
  - 
  - 
  4 
  396 
All other common stocks
  84 
  1,142 
  444 
  1,088 
  528 
  2,230 
 
    
    
    
    
    
    
Total equity securities
  94 
  1,731 
  444 
  1,088 
  538 
  2,819 
 
    
    
    
    
    
    
 
    
    
    
    
    
    
Total available for sale securities
 $131 
 $4,784 
 $444 
 $1,088 
 $575 
 $5,872 
 
At December 31, 2016, there were 17 securities in an unrealized loss position of which 5 of these positions had been in an unrealized loss position for 12 months or greater.
 
The Company believes there were no fundamental issues such as credit losses or other factors with respect to its fixed-maturity securities. It is expected that the securities would not be settled at a price less than the par value of the investments and because the Company has the ability and intent to hold these securities and it is probable that the Company will not be required to sell these securities until a market price recovery or maturity, the Company does not consider any of its fixed-maturity securities to be other-than-temporarily impaired at June 30, 2017 and December 31, 2016.
 
In determining whether equity securities are other than temporarily impaired, the Company considers its intent and ability to hold a security for a period of time sufficient to allow for the recovery of cost, along with factors including the length of time each security had been in an unrealized loss position, the extent of the decline and the near-term prospect for recovery. Based on management’s evaluation, the Company does not consider any of its equity securities to be other-than-temporarily impaired at June 30, 2017 and December 31, 2016.
 
 
 
20
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
4. 
INVESTMENTS (continued)
 
Assets Measured at Estimated Fair Value on a Recurring Basis
 
The following table presents information about the Company’s financial assets measured at estimated fair value on a recurring basis that is reflected in the consolidated balance sheets at carrying value. The table indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value as of June 30, 2017 and December 31, 2016:
 
 
 
Fair Value Measurements Using
 
 
   
 
 
 
(Level 1)
 
 
(Level 2)
 
 
(Level 3)
 
 
Total  
 
As of June 30, 2017
 
($ in thousands)
 
Financial Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 $5,758 
 $- 
 $- 
 $5,758 
 
    
    
    
    
Restricted cash and cash equivalents
 $26,496 
 $- 
 $- 
 $26,496 
 
    
    
    
    
Fixed-maturity securities:
    
    
    
    
U.S. Treasury and agency securities
  10,007 
  - 
  - 
  10,007 
 
    
    
    
    
 
    
    
    
    
Total fixed-maturity securities
  10,007 
  - 
  - 
  10,007 
 
    
    
    
    
Mutual funds
  608 
  - 
  - 
  608 
Preferred stocks
  919 
  - 
  - 
  919 
All other common stocks
  3,872 
  - 
  - 
  3,872 
 
    
    
    
    
Total equity securities
  5,399 
  - 
  - 
  5,399 
 
    
    
    
    
Total available for sale securities
  15,406 
  - 
  - 
  15,406 
 
    
    
    
    
Total
 $47,660 
 $- 
 $- 
 $47,660 
 
 
21
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
4. 
INVESTMENTS (continued)
 
 
 
Fair Value Measurements Using
 
 
   
 
 
 
(Level 1)
 
 
(Level 2)
 
 
(Level 3)
 
 
Total  
 
As of December 31, 2016
 
($ in thousands)                        
 
Financial Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 $12,242 
 $- 
 $- 
 $12,242 
 
    
    
    
    
Restricted cash and cash equivalents
 $23,440 
 $- 
 $- 
 $23,440 
 
    
    
    
    
Fixed-maturity securities:
    
    
    
    
U.S. Treasury and agency securities
  6,051 
  - 
  - 
  6,051 
 
    
    
    
    
 
    
    
    
    
Total fixed-maturity securities
  6,051 
  - 
  - 
  6,051 
 
    
    
    
    
 
    
    
    
    
Mutual funds
  396 
  - 
  - 
  396 
Preferred stocks
  691 
  - 
  - 
  691 
All other common stocks
  3,854 
  - 
  - 
  3,854 
 
    
    
    
    
Total equity securities
  4,941 
  - 
  - 
  4,941 
 
    
    
    
    
Total available for sale securities
  10,992 
  - 
  - 
  10,992 
 
    
    
    
    
Total
 $46,674 
 $- 
 $- 
 $46,674 
 
5.  TAXATION
 
Under current Cayman Islands law, no corporate entity, including the Company and the Subsidiary, is obligated to pay taxes in the Cayman Islands on either income or capital gains. The Company and the Subsidiary have an undertaking from the Governor-in-Cabinet of the Cayman Islands, pursuant to the provisions of the Tax Concessions Law, as amended, that, in the event that the Cayman Islands enacts any legislation that imposes tax on profits, income, gains or appreciations, or any tax in the nature of estate duty or inheritance tax, such tax will not be applicable to the Company and the Subsidiary or their operations, or to the ordinary shares or related obligations, until April 23, 2033 and May 17, 2033, respectively.
 
The Company and its subsidiary intend to conduct substantially all of their operations in the Cayman Islands in a manner such that they will not be engaged in a trade or business in the U.S. However, because there is no definitive authority regarding activities that constitute being engaged in a trade or business in the U.S. for federal income tax purposes, the Company cannot assure that the U.S. Internal Revenue Service will not contend, perhaps successfully, that the Company or its subsidiary is engaged in a trade or business in the U.S. A foreign corporation deemed to be so engaged would be subject to U.S. federal income tax, as well as branch profits tax, on its income that is treated as effectively connected with the conduct of that trade or business unless the corporation is entitled to relief under an applicable tax treaty.
 
 
22
 
OXBRIDGE RE HOLDINGS LIMITED AND SUBSIDIARY
Notes to Consolidated Financial Statements (unaudited)
June 30, 2017
 
 
6.  LOSSES AND LOSS ADJUSTMENT EXPENSES
 
The following table summarizes the Company’s loss and loss adjustment expenses (“LAE”) and the reserve for loss and LAE reserve movements for the three and six-month periods ending June 30, 2017 and 2016:

 
 
Three Months Ended    
 
 
Six Months Ended    
 
 
 
June 30,
 
 
June 30,
 
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
 
 
($ in thousands)
 
 
($ in thousands)
 
Balance, beginning of period
 $5,684 
  63 
 $8,702 
  - 
Incurred related to:
    
    
    
    
     Current period
  - 
  2,215 
  -