• Filing Date: 2020-03-23
  • Form Type: 10-K
  • Description: Annual report
v3.20.1
Document and Entity Information - USD ($)
12 Months Ended
Dec. 31, 2019
Mar. 23, 2020
Jun. 30, 2019
Document And Entity Information [Abstract]      
Entity Registrant Name OXBRIDGE RE HOLDINGS Ltd    
Entity Central Index Key 0001584831    
Document Type 10-K    
Document Period End Date Dec. 31, 2019    
Current Fiscal Year End Date --12-31    
Amendment Flag false    
Entity Voluntary Filers No    
Entity Well-known Seasoned Issuer No    
Entity Current Reporting Status Yes    
Entity Filer Category Non-accelerated Filer    
Entity Emerging Growth Company false    
Entity Small Business true    
Entity Shell Company false    
Document Annual Report true    
Document Transition Report false    
Entity Public Float     $ 1,020,885
Entity Common Stock, Shares Outstanding   5,733,587  
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2019    
Entity Interactive Data Current Yes    
Entity Incorporation, State or Country Code E9    
Entity File Number 1-36346    
v3.20.1
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Assets    
Fixed-maturity securities, available for sale, at fair value (amortized cost: $991) $ 0 $ 993
Equity securities, at fair value (cost of $210 in 2018) 692 162
Total investments 692 1,155
Cash and cash equivalents 5,962 8,074
Restricted cash and cash equivalents 2,054 3,225
Accrued interest and dividend receivable 12 15
Premiums receivable 506 0
Deferred policy acquisition costs 48 0
Operating lease right-of-use assets 133 0
Prepayment and other assets 79 74
Property and equipment, net 9 18
Total assets 9,495 12,561
Liabilities:    
Reserve for losses and loss adjustment expenses 0 4,108
Notes payable to noteholders 600 0
Unearned premiums reserve 440 0
Operating lease liabilities 133 0
Accounts payable and other liabilities 279 139
Total liabilities 1,452 4,247
Shareholders' equity:    
Ordinary share capital, (par value $0.001, 50,000,000 shares authorized; 5,733,587 shares issued and outstanding) 6 6
Additional paid-in capital 32,262 32,226
Accumulated Deficit (24,225) (23,920)
Accumulated other comprehensive income 0 2
Total shareholders' equity 8,043 8,314
Total liabilities and shareholders' equity $ 9,495 $ 12,561
v3.20.1
Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Fixed-maturity securities, available for sale, at fair value amortized cost $ 991 $ 4,450
Equity securities, at fair value cost $ 715 $ 210
Ordinary share, par value $ 0.001 $ 0.001
Ordinary shares, authorized 50,000,000 50,000,000
Ordinary shares, outstanding 5,733,587 5,733,587
Ordinary shares, issued 5,733,587 5,733,587
v3.20.1
Consolidated Statements of Income - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Revenue    
Assumed premiums $ 1,057 $ 2,361
Change in loss experience refund payable 0 (225)
Change in unearned premiums reserve (440) 592
Net premiums earned 617 2,728
Net income from derivatives 0 997
Net investment and other income 230 366
Net realized investment gain (loss) 3 (255)
Change in fair value of equity securities 25 (26)
Net gain (loss) on commutation 106 (8)
Total revenue 981 3,802
Expenses    
Losses and loss adjustment expenses 0 10,006
Policy acquisition costs and underwriting expenses 64 263
General and administrative expenses 1,067 1,282
Total expenses 1,131 11,551
Loss before (income) loss attributable to noteholders (150) (7,749)
(Income) loss attributable to noteholders (155) 2,000
Net loss $ (305) $ (5,749)
Basic loss per share $ (0.05) $ (1.00)
Diluted loss per share $ (0.05) $ (1.00)
Weighted-average shares outstanding basic and diluted 5,733,587 5,733,587
Dividends paid per share $ 0.00 $ 0.00
v3.20.1
Consolidated Statements of Comprehensive Income - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Statement of Comprehensive Income [Abstract]    
Net loss $ (305) $ (5,749)
Change in unrealized loss on investments:    
Unrealized gain arising during the year 1 4
Reclassification adjustment for net realized losses (gains) included in net (loss) income (3) 15
Net change in unrealized loss (2) 19
Total other comprehensive income (2) 19
Comprehensive loss $ (307) $ (5,730)
v3.20.1
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Operating activities    
Net loss $ (305) $ (5,749)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock-based compensation 36 126
Net amortization of premiums on investments in fixed-maturity securities 0 7
Depreciation and amortization 10 18
Net realized investment (gains) losses (3) 255
Change in fair value of equity securities (25) 26
Loss attributable to noteholders 0 (2,000)
Change in operating assets and liabilities:    
Accrued interest and dividend receivable 3 24
Premiums receivable (506) 3,798
Deferred policy acquisition costs (48) 48
Prepayment and other receivables (5) 42
Reserve for losses and loss adjustment expenses (4,108) (728)
Loss experience refund payable 0 (135)
Losses payable 0 (386)
Unearned premiums reserve 440 (2,012)
Accounts payable and other liabilities 140 33
Net cash used in operating activities (4,371) (6,633)
Investing activities    
Purchase of fixed-maturity securities 0 (4,903)
Purchase of equity securities (505) (6,009)
Proceeds from sale of fixed-maturity securities 994 8,340
Proceeds from sale of equity securities 0 7,617
Purchase of property and equipment (1) 0
Net cash provided by investing activities 488 5,045
Financing activities    
Proceeds on issuance of notes payable to Series noteholders 600 2,000
Net cash provided by (used in) financing activities 600 2,000
Net change during the year (3,283) 412
Cash and cash equivalents, and restricted cash and cash equivalents at beginning of year 11,299 10,887
Cash and cash equivalents, and restricted cash and cash equivalents at end of year 8,016 11,299
Supplemental disclosure of cash flow information    
Interest paid 0 0
Income taxes paid 0 0
Non-cash investing activities    
Net change in unrealized loss on securities available for sale (2) 19
Operating lease right-of-use assets 155 0
Operating lease liabilities $ 149 $ 0
v3.20.1
Consolidated Statements of Changes in Shareholders' Equity - USD ($)
$ in Thousands
Common Stock
Additional Paid-in Capital
(Accumulated Deficit) Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Total
Beginning Balance, Shares at Dec. 31, 2017 5,733,587        
Beginning Balance at Dec. 31, 2017 $ 6 $ 32,100 $ (18,149) $ (39) $ 13,918
Cumulative effect of change in accounting for equity securities as of January 1, 2018     (22) 22 0
Net loss     (211)   (211)
Stock-based compensation   31     31
Total other comprehensive income       (3) (3)
Ending Balance, Shares at Mar. 31, 2018 5,733,587        
Ending Balance at Mar. 31, 2018 $ 6 32,131 (18,382) (20) 13,735
Beginning Balance, Shares at Dec. 31, 2017 5,733,587        
Beginning Balance at Dec. 31, 2017 $ 6 32,100 (18,149) (39) 13,918
Net loss         (5,749)
Total other comprehensive income         19
Ending Balance, Shares at Dec. 31, 2018 5,733,587        
Ending Balance at Dec. 31, 2018 $ 6 32,226 (23,920) 2 8,314
Beginning Balance, Shares at Mar. 31, 2018 5,733,587        
Beginning Balance at Mar. 31, 2018 $ 6 32,131 (18,382) (20) 13,735
Net loss     265   265
Stock-based compensation   32     32
Total other comprehensive income       (1) (1)
Ending Balance, Shares at Jun. 30, 2018 5,733,587        
Ending Balance at Jun. 30, 2018 $ 6 32,163 (18,117) (21) 14,031
Net loss     (6,455)   (6,455)
Stock-based compensation   31     31
Total other comprehensive income       1 1
Ending Balance, Shares at Sep. 30, 2018 5,733,587        
Ending Balance at Sep. 30, 2018 $ 6 32,226 (23,920) 2 8,314
Net loss     (6,455)   (6,455)
Stock-based compensation   32     32
Total other comprehensive income       22 22
Ending Balance, Shares at Dec. 31, 2018 5,733,587        
Ending Balance at Dec. 31, 2018 $ 6 32,226 (23,920) 2 8,314
Net loss     (146)   (146)
Stock-based compensation   9     9
Total other comprehensive income       (2) (2)
Ending Balance, Shares at Mar. 31, 2019 5,733,587        
Ending Balance at Mar. 31, 2019 $ 6 32,235 (24,066) 0 8,175
Beginning Balance, Shares at Dec. 31, 2018 5,733,587        
Beginning Balance at Dec. 31, 2018 $ 6 32,226 (23,920) 2 8,314
Net loss         (305)
Total other comprehensive income         (2)
Ending Balance, Shares at Dec. 31, 2019 5,733,587        
Ending Balance at Dec. 31, 2019 $ 6 32,262 (24,225) 0 8,043
Beginning Balance, Shares at Mar. 31, 2019 5,733,587        
Beginning Balance at Mar. 31, 2019 $ 6 32,235 (24,066) 0 8,175
Net loss     (205)   (205)
Stock-based compensation   9     9
Ending Balance, Shares at Jun. 30, 2019 5,733,587        
Ending Balance at Jun. 30, 2019 $ 6 32,244 (24,271) 0 7,979
Net loss     (15)   (15)
Stock-based compensation   9     9
Ending Balance, Shares at Sep. 30, 2019 5,733,587        
Ending Balance at Sep. 30, 2019 $ 6 32,253 (24,286) 0 7,973
Net loss     61   61
Stock-based compensation   9     9
Ending Balance, Shares at Dec. 31, 2019 5,733,587        
Ending Balance at Dec. 31, 2019 $ 6 $ 32,262 $ (24,225) $ 0 $ 8,043
v3.20.1
Organization and Basis of Presentation
12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Organization and Basis of Presentation
(a) Organization

 

Oxbridge Re Holdings Limited (the “Company”) 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, an exempted 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 also owns 100% of the equity interest in Oxbridge Re NS, an entity incorporated as an exempted company on December 22, 2017 under the laws of the Cayman Islands to function as a reinsurance sidecar facility and to increase the underwriting capacity of Oxbridge Reinsurance Limited. The Company, through its subsidiaries (collectively “Oxbridge Re”) provides collateralized reinsurance in the property catastrophe market and invests in various insurance-linked securities. The Company operates as a single business segment through its wholly-owned subsidiaries. The Company’s headquarters and principal executive offices are located at Suite 201, 42 Edward Street, Georgetown, Grand Cayman, Cayman Islands, and have their registered offices at P.O. Box 309, Ugland House, Grand Cayman, Cayman Islands. We previously leased office space at 2nd Floor, Strathvale House, 90 North Church Street, Georgetown, 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.

 

(b) Basis of Presentation and Consolidation

 

The accompanying consolidated financial statements for the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated upon consolidation.

 

The Company consolidates in these consolidated financial statements the results of operations and financial position of all voting interest entities (“VOE”) in which the Company has a controlling financial interest and all variable interest entities (“VIE”) in which the Company is considered to be the primary beneficiary. The consolidation assessment, including the determination as to whether an entity qualifies as a VIE or VOE, depends on the facts and circumstances surrounding each entity.

 

v3.20.1
Significant Accounting Policies
12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Significant Accounting Policies

Use of Estimates: In preparing the consolidated financial statements, management was required to make certain estimates and assumptions that affect the reported amounts of the consolidated 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. 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.

 

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 for which its fixed-maturity securities are classified as available-for-sale. The Company’s available-for-sale investments are carried at fair value with changes in fair value included as a separate component of accumulated other comprehensive income in shareholders’ equity. For the Company’s investment in equity securities, the changes in fair value are recorded within the consolidated statements of operations.

 

Unrealized gains or losses are determined by comparing the fair market value of the investment 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 operations. The cost of investment 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 any fixed-maturity securities for 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 or 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 operations in the period in which the Company makes such determination. For a fixed-maturity 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 operations, 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).

 

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 fixed-maturity 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 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.

 

Derivative Financial Instruments: The Company may from time to time enter into underwriting contracts such as industry loss warranty contracts (“ILW”) that are treated as derivatives for GAAP purposes. GAAP requires that an entity recognize all derivatives in the consolidated balance sheet at fair value. It also requires that unrealized gains and losses resulting from changes in fair value be included in operations or other comprehensive (loss) income. The Company did not have any derivative financial assets at December 31, 2019 or December 31, 2018. There were no derivative financial liabilities at December 31, 2019, and all derivative financial liabilities at December 31, 2018 have been included within reserve for losses and loss adjustment expenses.

 

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 December 31, 2019, the DAC was considered fully recoverable and no premium deficiency loss was recorded and there was no DAC at December 31, 2018.

 

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 years ended December 31, 2019 and 2018, 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 in operations in the year in which they are determined. At December 31, 2019, no receivables were determined to be overdue or impaired, and accordingly, no allowance for uncollectable 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 operations 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.

 

Premiums assumed: The Company records premiums assumed, net of loss experience refunds, as earned pro-rata over the terms of the reinsurance agreements, or period of risk, where applicable, 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 during the period in which the risk incept and are expensed 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 consolidated 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 December 31, 2019.

 

Loss per share: Basic loss per share has been computed on the basis of the weighted-average number of ordinary shares outstanding during the years presented. Diluted loss 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.

 

Share-Based Compensation: The Company accounts for share-based compensation under the fair value recognition provisions of GAAP which requires the measurement and recognition of compensation for all share-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 stock 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 stock 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. 

 

2.  SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Recent adopted accounting pronouncements:

 

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. Under previous guidance for lessees, leases were only included on the balance sheet if certain criteria, classifying the agreement as a capital lease, were met. This update requires the recognition of a right-of-use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months.

 

For operating leases, the asset and liability are expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability is recognized separately from the amortization of the right-of-use asset in the consolidated statement of operations and the repayment of the principal portion of the lease liability is classified as a financing activity while the interest component is included in the operating section of the consolidated statement of cash flows.

 

We adopted ASU 2016-02, ASU 2018-10 Codification Improvements to Topic 842: Leases and ASU 2018-11 Leases (Topic 842): Targeted Improvements on January 1, 2019.  We applied the standards using the alternative transition method provided by ASU 2018-11 under which leases were recognized at the date of adoption and a cumulative-effective adjustment to the opening balance of retained earnings would have been recognized in the period of adoption. As the standard did not have an impact on our net loss, no adjustment to the opening balance of accumulated deficit was required. As of December 31, 2019, $155 thousand of right-of-use assets and $149 thousand of lease liabilities for operating leases were added as operating lease right-of-use assets and operating lease liabilities line items, respectively, on the consolidated balance sheet as a result of the adoption of this update. We implemented controls for the adoption of the standard and the ongoing monitoring of the right-of-use asset and lease liability, but they did not materially affect our internal control over financial reporting.

 

Pending Accounting Updates:

 

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 recoverable and other financial assets that have the contractual right to receive cash. The amendments are effective for annual periods beginning after December 15, 2022 (as amended), 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.

 

Accounting Standards Update No. 2018-13. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”).  ASU 2018-13 removes, modifies and adds certain disclosure requirements associated with fair value measurements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. We are currently evaluating our timeline for the adoption of this ASU, which only affects the presentation of certain disclosures and is not expected to impact our results of operations, financial position or liquidity.

 

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: Any reclassifications of prior period amounts have been made to conform to the current period presentation.

 

v3.20.1
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents
12 Months Ended
Dec. 31, 2019
Cash and Cash Equivalents [Abstract]  
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

 

    December 31,  
    2019     2018  
    (in thousands)  
             
Cash on deposit   $ 3,456     $ 3,965  
Cash held with custodians     2,506       4,109  
Restricted cash held in trust     2,054       3,225  
                 
Total   $ 8,016     $ 11,299  

 

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 SunTrust 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.

 

v3.20.1
Investments
12 Months Ended
Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Investments

The Company from time to time invests in fixed-maturity securities and equity securities, with its fixed-maturity securities classified as available-for-sale. At December 31, 2019, the Company did not hold any available-for-sale securities. At December 31, 2018, 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

Amortized

Cost

   

Gross

Unrealized

Gain

   

Gross

Unrealized

Loss

   

Estimated

Fair

Value ($000)

 
    ($ in thousands)  
As of December 31, 2018                        
Fixed-maturity securities                        
U.S. Treasury and agency securities   $ 991     $ 2     $ -     $ 993  
                                 

 

At December 31, 2018, available-for-sale securities with fair value of $993,000, was held in trust accounts as collateral under reinsurance contacts with the Company’s ceding insurers.

 

Proceeds received, and the gross realized gains and losses from sales of available-for-sale fixed-maturity securities, and equity securities, for the years ended December 31, 2019 and 2018 are as follows:

 

    Gross proceeds from sales    

Gross

Realized

Gains

   

Gross

Realized

Losses

 
    ($ in thousands)  
                   
Year ended December 31, 2019                  
Available-for-sale fixed-maturity securities   $ 994     $ 3     $ -  
                         
                         
Year ended December 31, 2018                        
Available-for-sale fixed-maturity securities   $ 8,340     $ 7     $ (22 )
                         
Equity securities   $ 7,617     $ 475     $ (715 )

 

The Company regularly reviews its individual investment securities for OTTI. The Company considers various factors in determining whether each individual debt 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.

 

There were no available-for-sale securities at December 31, 2019 neither were there any available-for-sale securities in an unrealized loss position at December 31, 2018.

 

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 December 31, 2019 and 2018:

 

    Fair Value Measurements Using        
    (Level 1)     (Level 2)     (Level 3)     Total  
As of December 31, 2019   ($ in thousands)  
Financial Assets:                        
Cash and cash equivalents   $ 5,962     $ -     $ -     $ 5,962  
                                 
Restricted cash and cash equivalents   $ 2,054     $ -     $ -     $ 2,054  
                                 
Total equity securities   $ 692     $ -     $ -     $ 692  
                                 
Total   $ 8,708     $ -     $ -     $ 8,708  

 

    Fair Value Measurements Using        
    (Level 1)     (Level 2)     (Level 3)     Total  
As of December 31, 2018   ($ in thousands)  
Financial Assets:                        
Cash and cash equivalents   $ 8,074     $ -     $ -     $ 8,074  
                                 
Restricted cash and cash equivalents   $ 3,225     $ -     $ -     $ 3,225  
                                 
Total fixed-maturity securities   $ -     $ 993     $ -     $ 993  
                                 
Total equity securities   $ 162     $ -     $ -     $ 162  
                                 
Total   $ 11,461     $ 993     $ -     $ 12,454  

 

There were no transfers between Levels 1, 2 and 3 during the years ended December 31, 2019 and 2018.

 

v3.20.1
Derivative Instruments
12 Months Ended
Dec. 31, 2019
Derivative Asset [Abstract]  
Derivative Instruments

Inward Industry Loss Warranty ("ILW") Swap

 

In January 2018, the Company entered into an inward ILW swap (the "2018 Inward ILW Swap") with a third-party under which qualifying loss payments are triggered by reference to the level of losses incurred by the insurance industry as a whole, rather than by losses incurred by the insured. In return for a fixed payment received of $1 million, the Company was required to make a floating payment in the event of certain losses incurred from specified natural catastrophes in North America, Caribbean, Europe, Japan, Australia, New Zealand and Latin America from January 2018 to December 2018. The Company’s maximum payment obligation under the 2018 Inward ILW Swap was $4 million. The ILW Swap expired on December 31, 2018 and the Company did not renew the ILW Swap during the year ending December 31, 2019.

 

During the year ending December 31, 2019, the Company settled its payment obligation of $4 million under the 2018 Inward ILW Swap.

 

v3.20.1
Taxation
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Taxation

Under current Cayman Islands law, no corporate entity, including the Company and the subsidiaries, is obligated to pay taxes in the Cayman Islands on either income or capital gains. The Company and its subsidiaries 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 its subsidiaries or their operations, or to the ordinary shares or related obligations, until April 23, 2033 and May 17, 2033, respectively.

 

The Company and its subsidiaries 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 subsidiaries are 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.

 

v3.20.1
Variable Interest Entities
12 Months Ended
Dec. 31, 2019
Variable Interest Entity, Measure of Activity [Abstract]  
Variable Interest Entities

Oxbridge Re NS. On December 22, 2017, the Company established Oxbridge Re NS, a Cayman domiciled and licensed special purpose insurer, formed to provide additional collateralized capacity to support Oxbridge Reinsurance Limited’s reinsurance business. In respect of the debt issued by Oxbridge Re NS to investors, Oxbridge Re NS has entered into a retrocession agreement with Oxbridge Reinsurance Limited effective June 1, 2018. Under this agreement, Oxbridge Re NS receives a quota share of Oxbridge Reinsurance Limited’s catastrophe business. Oxbridge Re NS is a non-rated insurer and the risks have been fully collateralized by way of funds held in trust for the benefit of Oxbridge Reinsurance Limited. Oxbridge Re NS is able to provide investors with access to diversified natural catastrophe risk backed by the distribution, underwriting, analysis and research expertise of Oxbridge Re.

 

The Company has determined that Oxbridge Re NS meets the definition of a VIE as it does not have sufficient equity capital to finance its activities. The Company concluded that it is the primary beneficiary and has consolidated the subsidiary upon its formation, as it owns 100% of the voting shares, 100% of the issued share capital and has a significant financial interest and the power to control the activities of Oxbridge Re NS that most significantly impacts its economic performance. The Company has no other obligation to provide financial support to Oxbridge Re NS. Neither the creditors nor beneficial interest holders of Oxbridge Re NS have recourse to the Company’s general credit.

 

Upon issuance of a series of participating notes by Oxbridge Re NS, all of the proceeds from the issuance are deposited into collateral accounts, to fund any potential obligation under the reinsurance agreements entered into with Oxbridge Reinsurance Limited underlying such series of notes. The outstanding principal amount of each series of notes generally is expected to be returned to holders of such notes upon the expiration of the risk period underlying such notes, unless an event occurs which causes a loss under the applicable series of notes, in which case the amount returned is expected to be reduced by such noteholder's pro rata share of such loss, as specified in the applicable governing documents of such notes. In addition, holders of such notes are generally entitled to interest payments, payable annually, as determined by the applicable governing documents of each series of notes. Oxbridge Re Holdings Limited receives an origination and structuring fee in connection with the formation, operation and management of Oxbridge Re NS.

 

Notes Payable to Series 2019-1 noteholders

 

Oxbridge Re NS entered into a retrocession agreement with Oxbridge Reinsurance Ltd on June 1, 2019 and issued $600 thousand of participating notes which provides quota share support for Oxbridge Re’s global property catastrophe excess of loss reinsurance business. The participating notes have been assigned Series 2019-1 and are due to mature on June 1, 2022. None of the participating notes were redeemed during the year ending December 31, 2019.

 

The income from Oxbridge Re NS operations that are attributable to the participating notes noteholders for the year ended December 31, 2019 was $155,000 and are included within accounts payable and other liabilities as at December 31, 2019.

 

Notes Payable to Series 2018-1 noteholders

 

Oxbridge Re NS issued $2 million of participating notes on June 1, 2018, all of which were issued to third parties and which provides quota share support for Oxbridge Re’s global property catastrophe excess of loss reinsurance business. The operations of Oxbridge Re NS commenced on June 1, 2018. The participating notes were due to mature on June 1, 2021. However, during the quarter ending December 31, 2018, the participating notes were triggered, and suffered full loss, and as a result, these notes were subsequently redeemed and cancelled.

 

v3.20.1
Reserve for Losses and Loss Adjustment Expenses
12 Months Ended
Dec. 31, 2019
Insurance [Abstract]  
Reserve for 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 years ended December 31, 2019 and 2018:

 

    Year ended  
    December 31,  
    2019     2018  
    ($ in thousands)  
             
Gross balance, beginning of year   $ 4,108       4,836  
Incurred, net of reinsurance, related to:                
     Current period     -       10,000  
     Prior period 1     (106 )     (1,006 )
           Total incurred, net of reinsurance     (106 )     8,994  
Paid, net of reinsurance, related to:                
     Current period     -       (6,000 )
     Prior period     (4,002 )     (3,722 )
           Total paid, net of reinsurance     (4,002 )     (9,722 )
Net balance, end of year   $ -       4,108  
     Add: reinsurance recoverable     -       -  
Gross balance, end of period   $ -       4,108  

 

1 During the year ended December 31, 2019, the Company entered into final commutation agreement with one (1) cedant under which the Company’s liabilities were commuted and discharged. The Company recognized a net gain on commutation of $106,000 which is presented as a separate line item in the Consolidated Statement of Operations.

 

The reserve for losses and LAE are comprised of case reserves (which are based on claims that have been reported) and IBNR reserves (which are based on losses that are believed to have occurred but for which claims have not yet been reported and include a provision for expected future development on existing case reserves). The Company uses the assistance of an independent actuary in the determination of IBNR and expected future development of existing case reserves. This is performed on a quarterly basis.

 

The uncertainties inherent in the reserving process and potential delays by cedants and brokers in the reporting of loss information, together with the potential for unforeseen adverse developments, may result in the reserve for losses and LAE ultimately being significantly greater or less than the reserve provided at the end of any given reporting period. The degree of uncertainty is further increased when a significant loss event takes place near the end of a reporting period. Reserve for losses and LAE estimates are reviewed periodically on a contract by contract basis and updated as new information becomes known. Any resulting adjustments are reflected in income in the period in which they become known.

 

The Company’s reserving process is highly dependent on the timing of loss information received from its cedants and related brokers.

 

Reserving methodologies and assumptions

 

Loss reserves are generally established based on loss payments and case reserves reported by clients when, and if, received. Estimates for IBNR losses are added to the case reserves. To establish IBNR loss estimates, the Company uses quarterly actuarial estimates from its independent actuary, who utilizes loss data reported by the Company along with industry loss data and information, knowledge of the business written and actuary’s own professional judgment.

 

The independent actuary employs standard actuarial methods for its analysis each quarter. Such methods may include the:

 

Reported Loss Development Method. Ultimate losses are estimated by calculating past reported loss development factors and applying them to exposure periods with further expected reported loss development. Since reported losses include payments and case reserves, changes in both of these amounts are incorporated in this method.

 

Expected Loss Ratio Method. Ultimate losses are estimated by multiplying earned premiums by an expected loss ratio. The expected loss ratio is selected using industry data, historical company data and actuarial professional judgment. This method is typically used for lines of business and contracts where there are no historical losses or where past loss experience is not credible.

 

Bornhuetter-Ferguson Reported Loss Method. Ultimate losses are estimated by modifying expected loss ratios to the extent reported losses experienced to date differ from what would have been expected to have been reported based upon the selected reported loss development pattern. This method avoids some of the distortions that could result from a large development factor being applied to a small base of reported losses to calculate ultimate losses.

 

Reserving methodologies and assumptions (cont’d)

 

Frequency / Severity Method. Ultimate losses are estimated under this method by multiplying the ultimate number of claims (i.e. the frequency multiplied by the exposure base on which the frequency has been determined), by the estimated ultimate average cost per claim (i.e. the severity). By analyzing claims experience by its frequency and severity components, the Company can examine trends and patterns in the rates of claims emergence (i.e. reporting) and settlement (i.e. closure) as well as in the average cost of claims. The approach is valuable because sometimes there is more inherent stability in the frequency and severity data when viewed separately rather than in the total losses

 

In addition, the Company may supplement its analysis with other reserving methodologies that are deemed to be relevant to specific contracts.

 

For each contract, the Company’s independent actuary utilizes reserving methodologies that are deemed appropriate to calculate a best estimate, or point estimate, of reserves. The decision of whether to use a single methodology or a combination of multiple methodologies depends upon the judgment of the independent actuary. The Company’s reserving methodology does not require a fixed weighting of the various methods used. Certain methods are considered more appropriate depending on the type and structure of the contract, the age and maturity of the contract, and the duration of the expected paid losses on the contract.

 

The Company’s gross aggregate reserves are the sum of the point estimate reserves of all portfolio exposures. Generally, IBNR loss reserves are calculated by estimating the ultimate incurred losses at any point in time and subtracting cumulative paid claims and case reserves, which incorporate specific exposures, loss payment and reporting patterns and other relevant factors.

 

There were no significant changes in the actuarial methodology or assumptions relating to the Company’s reserve for loss and loss adjustment expenses for the year ended December 31, 2019 or 2018.

 

Claims Development Tables, IBNR Reserves and Claims Frequency

 

The following table discloses information about the Company’s incurred and paid claims development as of December 31, 2019, as well as cumulative claim frequency and the total of incurred-but-not-reporting and expected development on reported claims included within the net incurred claims amounts. A claim is defined as a reported loss from a cedant on an excess-of-loss reinsurance contract arising from a loss event for which the Company records a paid loss or case reserve. The Company operates a single business segment, being property catastrophe reinsurance.

 

Property Catastrophe Reinsurance                                   
(in thousands)                                   
                              As of  
 

Incurred Losses and Loss Adjustment Expenses

                          December 31, 2019  
                                       
                              Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims     Cumulative Number of Reported Claims  
                              (dollars in thousands)        

Accident Year

    2016     2017     2018     2019              
2016     $ 14,775     $ 18,801     $ 17,795     $ 17,689     $ -       5  
2017             $ 38,401     $ 38,401     $ 38,401     $ -       8  
2018                     $ 10,000     $ 10,000     $ -       2  
2019                             $ -     $ -       -  
        Total                     $ 66,090     $ -          

 

Cumulative Paid Losses and Loss Adjustment Expenses

 

For the Years Ended December 31,

(in thousands)

 

Accident Year     2016     2017     2018     2019              
2016     $ 6,073     $ 16,073     $ 17,687     $ 17,689                  
2017             $ 36,293     $ 38,401     $ 38,401                  
2018                     $ 6,000     $ 10,000                  
2019                             $ -                  
        Total                     $ 66,090                  
  Reserve for loss and loss adjustment expenses at December 31, 2019, net of reinsurance                           $ -                  

 

 

During the year ended December 31, 2019, the Company did not enter into any retrocession arrangements.

 

During the year ended December 31, 2018, the Company did not enter into any retrocession arrangements. However, the Company had issued its $2 million Series 2018-1 participating notes, all of which were drawn down to settle losses incurred by the Company as per the provisions of the Series 2018-1 participating notes. As such, the Company’s gross and net reserve for losses and loss adjustment expenses at December 31, 2018 are both $4,108,000 as recorded on the consolidated balance sheets.

 

The following table shows the historical average annual percentage payout of claims as at December 31, 2019.

 

Years

  1     2     3     4  
                         
Property Catastrophe Reinsurance     62.9 %     34.0 %     9.1 %     0.0 %
                                 

 

v3.20.1
Loss Per Share
12 Months Ended
Dec. 31, 2019
Earnings Per Share [Abstract]  
Loss Per Share

A summary of the numerator and denominator of the basic and diluted loss per share is presented below (dollars in thousands except per share amounts):

 

    Years ended December 31  
    2019     2018  
Numerator:            
     Net loss   $ (305 )     (5,749 )
                 
Denominator:                
    Weighted average shares - basic     5,733,587       5,733,587  
    Effect of dilutive securities - Stock options     -       -  
    Shares issuable upon conversion of warrants     -       -  
    Weighted average shares - diluted     5,733,587       5,733,587  
Loss per share - basic   $ (0.05 )     (1.00 )
Loss per share - diluted   $ (0.05 )     (1.00 )

 

For the years ended December 31, 2019, options to purchase 540,000 ordinary shares were anti-dilutive due to net loss during the year presented. For the year ended December 31, 2018, 250,000 options to purchase 250,000 ordinary shares were anti-dilutive as the sum of the proceeds, including unrecognized compensation expense, exceeded the average market price of the Company’s ordinary share during the period presented. For the years ended December 31, 2019 and 2018, 8,230,700 warrants to purchase an aggregate of 8,230,700 ordinary shares were anti-dilutive because the exercise price of $7.50 exceeded the average market price of the Company’s ordinary share during the periods presented.

 

GAAP requires the Company to use the two-class method in computing basic loss per share since holders of the Company’s restricted stock have the right to share in dividends, if declared, equally with common stockholders. These participating securities effect the computation of both basic and diluted earnings per share during periods of net loss.

 

v3.20.1
Shareholders' Equity
12 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
Shareholders' Equity

On February 28, 2014, the Company’s Registration Statement on Form S-1, as amended, relating to the initial public offering of the Company’s units was declared effective by the SEC. The Registration Statement covered the offer and sale by the Company of 4,884,650 units, each consisting of one ordinary share and one warrant (“Unit”), which were sold to the public on March 26, 2014 at a price of $6.00 per Unit. The ordinary shares and warrants comprising the Units began separate trading on May 9, 2014. The ordinary shares and warrants are traded on the Nasdaq Capital Market under the symbols “OXBR” and “OXBRW,” respectively. One warrant may be exercised to acquire one ordinary share at an exercise price equal to $7.50 per share on or before March 26, 2024. At any time after September 26, 2014 and before the expiration of the warrants, the Company at its option may cancel the warrants in whole or in part, provided that the closing price per ordinary share has exceeded $9.38 for at least ten trading days within any period of twenty consecutive trading days, including the last trading day of the period.

 

The initial public offering resulted in aggregate gross proceeds to the Company of approximately $29.3 million (of which approximately $5 million related to the fair value proceeds on the warrants issued) and net proceeds of approximately $26.9 million after deducting underwriting commissions and offering expenses.

 

There were 8,230,700 warrants outstanding at December 31, 2019 and 2018. No warrants were exercised during the years ended December 31, 2019 and 2018.

 

As of December 31, 2019, none of the Company’s retained earnings were restricted from payment of dividends to the company’s shareholders. However, since most of the Company’s capital and retained earnings may be invested in its subsidiaries, a dividend from the subsidiaries would likely be required in order to fund a dividend to the Company’s shareholders and would require notification to the Cayman Islands Monetary Authority (“CIMA”).

 

Under Cayman Islands law, the use of additional paid-in capital is restricted, and the Company will not be allowed to pay dividends out of additional paid-in capital if such payments result in breaches of the prescribed and minimum capital requirement. See also Note 12.

 

v3.20.1
Stock-Based Compensation
12 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation

The Company currently has outstanding stock-based awards granted under the 2014 Omnibus Incentive Plan (the “Plan”). Under the Plan, the Company has discretion to grant equity and cash incentive awards to eligible individuals, including the issuance of up to 1,000,000 of the Company’s ordinary shares. At December 31, 2019, there were 400,000 shares available for grant under the Plan.

 

Stock options

 

Stock options granted and outstanding under the Plan vests quarterly over four years and are exercisable over the contractual term of ten years.

 

A summary of the stock option activity for the years ended December 31, 2019 and 2018 is as follows (option amounts not in thousands):

 

   

Number

of

Options

   

Weighted Average

Exercise

Price

   

Weighted-Average Remaining

Contractual

Term

   

Aggregate

Intrinsic

Value ($000)

 
                         
Outstanding at January 1, 2018     250,000                          
Outstanding at December 31, 2018     250,000     $ 6.01       6.4 years          
Granted     290,000     $ 2.00                  
Outstanding at December 31, 2019     540,000     $ 3.86       7.4 years     $ -  
Exercisable at December 31, 2019     291,250     $ 5.26       6.1 years     $ -  

 

Compensation expense recognized for the years ended December 31, 2019 and 2018 totaled $36,000 and $38,000, respectively, and is included in general and administrative expenses. At December 31, 2019 and 2018, there was approximately $86,000 and $16,000, respectively, of total unrecognized compensation expense related to non-vested stock options granted under the Plan. The Company expects to recognize the remaining compensation expense over a weighted-average period of thirty (30) months.

 

No options were granted during the year ended December 31, 2018. During the year ended December 31, 2019, 290,000 options were granted with fair value estimated on the date of grant using the following assumptions and the Black-Scholes option pricing model:

 

    2019  
       
Expected dividend yield     0 %
Expected volatility     31 %
Risk-free interest rate     2.59 %
Expected life (in years)     10  
Per share grant date fair value of options issued   $ 0.36  

 

At the time of the grant, the dividend yield was based on the Company’s history and expectation of dividend payouts at the time of the grant; expected volatility was based on volatility of similar companies’ common stock; the risk-free rate was based on the U.S. Treasury yield curve in effect and the expected life was based on the contractual life of the options.

 

Restricted Stock Awards

 

The Company has granted and may grant restricted stock awards to eligible individuals in connection with their service to the Company. The terms of the Company’s outstanding restricted stock grants may include service, performance and market-based conditions. The fair value of the awards with market-based conditions is determined using a Monte Carlo simulation method, which calculates many potential outcomes for an award and then establishes fair value based on the most likely outcome. The determination of fair value with respect to the awards with only performance or service-based conditions is based on the value of the Company’s stock on the grant date. Restricted stock awards granted and outstanding under the Plan vests quarterly over four years.

 

During the year ended December 31, 2019 and 2018, the Company did not grant any restricted stock. At December 31, 2019 there were no unvested restricted stock. Compensation expense recognized for the year ended December 31, 2018 totaled $88,000 and was included in general and administrative expenses.

 

v3.20.1
Net Worth for Regulatory Purposes
12 Months Ended
Dec. 31, 2019
Net Capital Requirements [Text Block]  
Net Worth for Regulatory Purposes

The subsidiaries are subject to a minimum and prescribed capital requirement as established by CIMA. Under the terms of their respective licenses, Oxbridge Reinsurance Limited and Oxbridge Re NS are required to maintain a minimum and prescribed capital requirement of $500 in accordance with the relevant subsidiary’s approved business plan filed with CIMA.

 

At December 31, 2019, the Oxbridge Reinsurance Limited’s net worth of $1.4 million exceeded the minimum and prescribed capital requirement. For the years ended December 31, 2019 and 2018, Oxbridge Reinsurance Ltd.’s net loss was approximately $817 thousand and $6 million, respectively.

 

At December 31, 2019, the Oxbridge Re NS’ net worth of $105 thousand exceeded the minimum and prescribed capital requirement. For the years ended December 31, 2019 and 2018, Oxbridge Re NS’ net income was approximately $86 thousand and $18 thousand, respectively.

 

The Subsidiaries are not required to prepare separate statutory financial statements for filing with CIMA, and there were no material differences between the Subsidiaries' GAAP capital, surplus and net income, and its statutory capital, surplus and net income as of December 31, 2019 or for the year then ended.

v3.20.1
Fair Value and Certain Risks and Uncertainties
12 Months Ended
Dec. 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value and Certain Risks and Uncertainties

Fair values

 

With the exception of balances in respect of insurance contracts (which are specifically excluded from fair value disclosures under GAAP) and investment securities and derivative instruments as disclosed in Note 4 and 5 of these consolidated financial statements, the carrying amounts of all other financial instruments, which consist of cash and cash equivalents, restricted cash and cash equivalents, accrued interest and dividends receivable, premiums receivable and other assets and accounts payable and other liabilities, approximate their fair values due to their short-term nature.

 

Concentration of underwriting risk

 

A substantial portion of the Company’s current reinsurance business ultimately relates to the risks of two entities; accordingly, the Company’s underwriting risks are not significantly diversified.

 

Concentrations of Credit and Counterparty Risk

 

The Company’s derivative instruments are subject to counterparty risk. The Company routinely monitors this risk.

 

The Company markets retrocessional and reinsurance policies worldwide through its brokers.  Credit risk exists to the extent that any of these brokers may be unable to fulfill their contractual obligations to the Company.  For example, the Company is required to pay amounts owed on claims under policies to brokers, and these brokers, may fail to pay over the money to the cedants. In some jurisdictions, if a broker fails to make such a payment, the Company might remain liable to the ceding company for the deficiency. In addition, in certain jurisdictions, when the ceding company pays premiums for these policies to brokers, these premiums are considered to have been paid and the ceding insurer is no longer liable to the Company for those amounts, whether or not the premiums have actually been received.

 

The Company remains liable for losses it incurs to the extent that any third-party reinsurer is unable or unwilling to make timely payments under reinsurance agreements.  The Company would also be liable in the event that its ceding companies were unable to collect amounts due from underlying third-party reinsurers.

 

In addition, the Company is exposed to credit risk on fixed-maturity debt instruments to the extent that the debtors may default on their debt obligations.

 

The Company mitigates its concentrations of credit and counterparty risk by using reputable and several counterparties which decreases the likelihood of any significant concentration of credit risk with any one counterparty. Additionally, the Company invests in fixed-maturity securities that are investment grade or higher.

 

Market risk

 

Market risk exists to the extent that the values of the Company’s monetary assets fluctuate as a result of changes in market prices. Changes in market prices can arise from factors specific to individual securities or their respective issuers, or factors affecting all securities traded in a particular market. Relevant factors for the Company are both volatility and liquidity of specific securities and markets in which the Company holds investments. The Company has established investment guidelines that seek to mitigate significant exposure to market risk.

 

v3.20.1
Leases
12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Leases

We adopted ASU 2016-02, Leases on January 1, 2019, which resulted in the recognition of operating leases on the consolidated balance sheet in 2019 and forward. See Note 2 – Significant Accounting Policies for more information on the adoption of the ASU. Right-of-use assets and lease liabilities are disclosed as line items in the consolidated balance sheet. We determine if a contract contains a lease at inception and recognize operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments at the commencement date. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. Lease agreements that have lease and non-lease components, are accounted for as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.

 

The Company’s operating lease obligations are for the Company’s office facilities. Our lease has a remaining lease term of approximately 50 months, and includes an option to extend the lease. Under the terms of the lease, the Company also has the right to terminate the lease after thirty-six (36) months upon giving appropriate notice in writing to the Lessor. The components of lease expense and other lease information as of and during the year ended December 31, 2019 are as follows:

 

(in thousands)

 

For the Three-Month Period

Ended 

December 31,

2019

   

For the Twelve-Month Period

Ended 

December 31,

2019

 
Operating Lease Cost (1)   $ 22     $ 85  
                 
Cash paid for amounts included in the measurement of lease liabilities                
Operating cash flows from operating leases   $ 22     $ 93  

 

(1) Includes short-term leases

 

(in thousands)

  At December 31, 2019  
Operating lease right-of-use assets   $ 133  
         
Operating lease liabilities   $ 133  
         
Weighted-average remaining lease term - operating leases     4.17 years  
         
Weighted-average discount rate - operating leases     6.5 %
         

 

 

Future minimum lease payments under non-cancellable leases as of December 31, 2019, reconciled to our discounted operating lease liability presented on the consolidated balance sheet are as follows:

 

(in thousands)

  At December 31, 2019  
Remainder of 2019   $ -  
2020     36  
2021     36  
2022     37  
2023     37  
Thereafter     6  
Total future minimum lease payments   $ 152  
         
Less imputed interest     (19 )
Total operating lease liability   $ 133  

 

v3.20.1
Related Party Transactions
12 Months Ended
Dec. 31, 2019
Related Party Transactions [Abstract]  
Related Party Transactions

The Company had entered into reinsurance agreements with Claddaugh, which is a related entity through common directorships. At December 31, 2019 and 2018, there were no related-party loss experience refund payable and unearned premiums reserve on the consolidated amounts included within balance sheets.

 

During the year ended December 31, 2018, included within change in loss experience refund payable and change in unearned premiums reserve on the consolidated statements of operations are the following related-party amounts:

 

    December 31,  
    2019     2018  
    (in thousands)  
             
Revenue            
Change in loss experience refund payable   $ -     $ 225  
Change in unearned premiums reserve   $ -     $ 592  

 

During the year ending December 31, 2019, Mr. Jay Madhu, a director and officer of the Company and its subsidiaries, invested $50 thousand in Series 2019-1 participating notes.

 

v3.20.1
Property and Equipment, Net
12 Months Ended
Dec. 31, 2019
Property, Plant and Equipment [Abstract]  
Property and Equipment, Net

Property and equipment, net consist of the following (in thousands):

 

    At December 31,  
    2019     2018  
             
Leasehold improvements   $ 21       21  
Furniture and Fixtures     38       38  
Motor vehicle     21       21  
Computer equipment and software     33       32  
     Total, at cost     113       112  
      less accumulated depreciation and amortization     (104 )     (94 )
Property and equipment, net   $ 9       18  

 

v3.20.1
Subsequent Events
12 Months Ended
Dec. 31, 2019
Subsequent Events [Abstract]  
Subsequent Events

We evaluate all subsequent events and transactions for potential recognition or disclosure in our financial statements. There were no other events subsequent to December 31, 2019 for which disclosure was required.

 

v3.20.1
Schedule I - Summary of Investments - Other Than Investments in Related Parties
12 Months Ended
Dec. 31, 2019
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Abstract]  
Schedule I - Summary of Investments - Other Than Investments in Related Parties

Type of investment

 

Cost or

Amortized

Cost

   

Fair

Value

   

Balance Sheet

Value

 
       
Preferred stocks     5       6       6  
Common stocks     710       686       686  
                         
Total equity securities     715       692       692  
                         
                         
Total investments   $ 715     $ 692       692  
v3.20.1
Schedule II - Condensed Financial Information of Registrant
12 Months Ended
Dec. 31, 2019
Condensed Financial Information Disclosure [Abstract]  
Schedule II - Condensed Financial Information of Registrant
    At December 31,  
    2019     2018  
             
Assets            
             
Cash and cash equivalents     3,455       3,874  
Equity securities     692       162  
Investment in subsidiaries     1,538       2,272  
Accrued interest and dividend receivable     4       -  
Due from subsidiaries     2,394       2,054  
Prepayment and other receivables     75       66  
Operating lease right-of-use assets     133       -  
Property and equipment, net     9       18  
  Total assets   $ 8,300       8,446  
                 
Liabilities and Shareholders’ Equity                
Liabilities:

 

 

 

             
Operating lease liabilities     133       -  
Accounts payable and other liabilities     124       132  
                 
Shareholders’ equity:                
         Total shareholders’ equity     8,043       8,314  
         Total liabilities and shareholders’ equity   $ 8,300       8,446  

 

 

    Years Ended December 31,  
    2019     2018  
             
             
Revenue            
Net investment income   $ 102       168  
Change in fair value of equity securities     25       -  
Net realized investment losses     -       (237 )
Other income     1,357       1,586  
Operating expenses     (1,057 )     (1,264 )
Income before equity in loss of subsidiaries     427       253  
Equity in loss of subsidiaries     (732 )     (6,002 )
                 
Net loss   $ (305 )     (5,749 )

  

 

    Years Ended December 31,  
    2019     2018  
Operating activities            
Net loss   $ (305 )     (5,749 )
Adjustments to reconcile net loss to net cash provided by operating activities:                
Equity in loss of subsidiaries     732       6,002  
Stock-based compensation     36       126  
Net amortization of premiums on investments in fixed-maturity securities     -       7  
Depreciation     10       18  
Net realized investment losses     -       237  
Change in fair value of equity securities     (25 )     -  
Change in operating assets and liabilities:                
Accrued interest and dividend receivable     (4 )     35  
Due from subsidiary     (340 )     (197 )
Prepayment and other receivables     (9 )     42  
Accounts payable and other liabilities     (8 )     26  
                 
Net cash provided by operating activities   $ 87       547  
                 
Investing activities                
Investment in subsidiary     -       (5,535 )
Purchase of available for sale securities     (505 )     (7,939 )
Proceeds from sale of available for sale securities     -       12,550  
Purchase of property and equipment     (1 )     -  
                 
Net cash used in investing activities   $ (506 )     (924 )
                 
Net change in cash and cash equivalents     (419 )     (377 )
Cash and cash equivalents at beginning of year     3,874       4,251  
Cash and cash equivalents at end of year   $ 3,455       3,874  
                 
v3.20.1
Schedule III - Supplementary Insurance Information
12 Months Ended
Dec. 31, 2019
SEC Schedule, 12-16, Insurance Companies, Supplementary Insurance Information [Abstract]  
Schedule III - Supplementary Insurance Information

Year

 

Segment

   

Deferred

acquisition

costs, net

   

Reserves

for losses

and loss

adjustment

expenses

– gross

   

Unearned

premiums

– gross

   

Net

premiums

earned

   

Investment

income (loss)

   

Net losses,

and loss

adjustment

expenses

   

Amortization

of deferred

acquisition

costs

   

Operating

expenses

   

Gross

premiums

written

 
2019   Property & Casualty     $ 48     $ -     $ 440     $ 617     $ 3     $ -     $ 64     $ 1,067     $ 1,057  
2018   Property & Casualty     $ -     $ 4,108     $ -     $ 2,728     $ (255 )   $ 10006     $ 263     $ 1,282     $ 2,361  

 

v3.20.1
Schedule IV - Reinsurance Information
12 Months Ended
Dec. 31, 2019
SEC Schedule, 12-17, Insurance Companies, Reinsurance [Abstract]  
Schedule IV - Reinsurance Information

Year

 

Segment

    Direct Gross Premiums     Premiums ceded to other companies     Premiums assumed from other companies     Net amount     Percentage of amount assumed to net  
2019   Property & Casualty     $ -     $ -     $ 1,057     $ 1,057       100 %
2018   Property & Casualty     $ -     $ -     $ 2,361     $ 2,361       100 %
v3.20.1
Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Use of estimates

In preparing the consolidated financial statements, management was required to make certain estimates and assumptions that affect the reported amounts of the consolidated 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. 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.

 

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 for which its fixed-maturity securities are classified as available-for-sale. The Company’s available-for-sale investments are carried at fair value with changes in fair value included as a separate component of accumulated other comprehensive income in shareholders’ equity. For the Company’s investment in equity securities, the changes in fair value are recorded within the consolidated statements of operations.

 

Unrealized gains or losses are determined by comparing the fair market value of the investment 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 operations. The cost of investment 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 any fixed-maturity securities for 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 or 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 operations in the period in which the Company makes such determination. For a fixed-maturity 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 operations, 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).

 

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 fixed-maturity 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 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.

 

Derivative financial instruments

The Company may from time to time enter into underwriting contracts such as industry loss warranty contracts (“ILW”) that are treated as derivatives for GAAP purposes. GAAP requires that an entity recognize all derivatives in the consolidated balance sheet at fair value. It also requires that unrealized gains and losses resulting from changes in fair value be included in operations or other comprehensive (loss) income. The Company did not have any derivative financial assets at December 31, 2019 or December 31, 2018. There were no derivative financial liabilities at December 31, 2019, and all derivative financial liabilities at December 31, 2018 have been included within reserve for losses and loss adjustment expenses.

 

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 December 31, 2019, the DAC was considered fully recoverable and no premium deficiency loss was recorded and there was no DAC at December 31, 2018.

 

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 years ended December 31, 2019 and 2018, 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 in operations in the year in which they are determined. At December 31, 2019, no receivables were determined to be overdue or impaired, and accordingly, no allowance for uncollectable 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 operations 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.

 

Premiums assumed

The Company records premiums assumed, net of loss experience refunds, as earned pro-rata over the terms of the reinsurance agreements, or period of risk, where applicable, 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 during the period in which the risk incept and are expensed 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 consolidated 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 December 31, 2019.

 

Loss per share

Basic loss per share has been computed on the basis of the weighted-average number of ordinary shares outstanding during the years presented. Diluted loss 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 share-based compensation under the fair value recognition provisions of GAAP which requires the measurement and recognition of compensation for all share-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 stock 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 stock 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. 2016-02. 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. Under previous guidance for lessees, leases were only included on the balance sheet if certain criteria, classifying the agreement as a capital lease, were met. This update requires the recognition of a right-of-use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months.

 

For operating leases, the asset and liability are expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability is recognized separately from the amortization of the right-of-use asset in the consolidated statement of operations and the repayment of the principal portion of the lease liability is classified as a financing activity while the interest component is included in the operating section of the consolidated statement of cash flows.

 

We adopted ASU 2016-02, ASU 2018-10 Codification Improvements to Topic 842: Leases and ASU 2018-11 Leases (Topic 842): Targeted Improvements on January 1, 2019.  We applied the standards using the alternative transition method provided by ASU 2018-11 under which leases were recognized at the date of adoption and a cumulative-effective adjustment to the opening balance of retained earnings would have been recognized in the period of adoption. As the standard did not have an impact on our net loss, no adjustment to the opening balance of accumulated deficit was required. As of December 31, 2019, $155 thousand of right-of-use assets and $149 thousand of lease liabilities for operating leases were added as operating lease right-of-use assets and operating lease liabilities line items, respectively, on the consolidated balance sheet as a result of the adoption of this update. We implemented controls for the adoption of the standard and the ongoing monitoring of the right-of-use asset and lease liability, but they did not materially affect our internal control over financial reporting.

 

Pending Accounting Updates:

 

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 recoverable and other financial assets that have the contractual right to receive cash. The amendments are effective for annual periods beginning after December 15, 2022 (as amended), 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.

 

Accounting Standards Update No. 2018-13. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”).  ASU 2018-13 removes, modifies and adds certain disclosure requirements associated with fair value measurements. ASU 2018-13 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. We are currently evaluating our timeline for the adoption of this ASU, which only affects the presentation of certain disclosures and is not expected to impact our results of operations, financial position or liquidity.

 

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

Any reclassifications of prior period amounts have been made to conform to the current period presentation.

v3.20.1
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents (Tables)
12 Months Ended
Dec. 31, 2019
Cash and Cash Equivalents [Abstract]  
Summary of cash and cash equivalents and restricted cash and cash equivalents
    December 31,  
    2019     2018  
    (in thousands)  
             
Cash on deposit   $ 3,456     $ 3,965  
Cash held with custodians     2,506       4,109  
Restricted cash held in trust     2,054       3,225  
                 
Total   $ 8,016     $ 11,299  
v3.20.1
Investments (Tables)
12 Months Ended
Dec. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Summary of available-for-sale securities
   

Cost or

Amortized

Cost

   

Gross

Unrealized

Gain

   

Gross

Unrealized

Loss

   

Estimated

Fair

Value ($000)

 
    ($ in thousands)  
As of December 31, 2018                        
Fixed-maturity securities                        
U.S. Treasury and agency securities   $ 991     $ 2     $ -     $ 993  
Schedule of contractual maturities of fixed-maturity securities
    Gross proceeds from sales    

Gross

Realized

Gains

   

Gross

Realized

Losses

 
    ($ in thousands)  
                   
Year ended December 31, 2019                  
Available-for-sale fixed-maturity securities   $ 994     $ 3     $ -  
                         
                         
Year ended December 31, 2018                        
Available-for-sale fixed-maturity securities   $ 8,340     $ 7     $ (22 )
                         
Equity securities   $ 7,617     $ 475     $ (715 )
Fair value of assets measured on recurring basis
    Fair Value Measurements Using        
    (Level 1)     (Level 2)     (Level 3)     Total  
As of December 31, 2019   ($ in thousands)  
Financial Assets:                        
Cash and cash equivalents   $ 5,962     $ -     $ -     $ 5,962  
                                 
Restricted cash and cash equivalents   $ 2,054     $ -     $ -     $ 2,054  
                                 
Total equity securities   $ 692     $ -     $ -     $ 692  
                                 
Total   $ 8,708     $ -     $ -     $ 8,708  

 

    Fair Value Measurements Using        
    (Level 1)     (Level 2)     (Level 3)     Total  
As of December 31, 2018   ($ in thousands)  
Financial Assets:                        
Cash and cash equivalents   $ 8,074     $ -     $ -     $ 8,074  
                                 
Restricted cash and cash equivalents   $ 3,225     $ -     $ -     $ 3,225  
                                 
Total fixed-maturity securities   $ -     $ 993     $ -     $ 993  
                                 
Total equity securities   $ 162     $ -     $ -     $ 162  
                                 
Total   $ 11,461     $ 993     $ -     $ 12,454  

 

v3.20.1
Reserve for Losses and Loss Adjustment Expenses (Tables)
12 Months Ended
Dec. 31, 2019
Insurance [Abstract]  
Schedule of loss adjustment expense
    Year ended  
    December 31,  
    2019     2018  
    ($ in thousands)  
             
Gross balance, beginning of year   $ 4,108       4,836  
Incurred, net of reinsurance, related to:                
     Current period     -       10,000  
     Prior period 1     (106 )     (1,006 )
           Total incurred, net of reinsurance     (106 )     8,994  
Paid, net of reinsurance, related to:                
     Current period     -       (6,000 )
     Prior period     (4,002 )     (3,722 )
           Total paid, net of reinsurance     (4,002 )     (9,722 )
Net balance, end of year   $ -       4,108  
     Add: reinsurance recoverable     -       -  
Gross balance, end of period   $ -       4,108  
Incurred and paid claims development, net of reinsurance
Property Catastrophe Reinsurance                                   
(in thousands)                                   
                              As of  
 

Incurred Losses and Loss Adjustment Expenses

                          December 31, 2019  
                                       
                              Total of Incurred-but-Not-Reported Liabilities Plus Expected Development on Reported Claims     Cumulative Number of Reported Claims  
                              (dollars in thousands)        

Accident Year

    2016     2017     2018     2019              
2016     $ 14,775     $ 18,801     $ 17,795     $ 17,689     $ -       5  
2017             $ 38,401     $ 38,401     $ 38,401     $ -       8  
2018                     $ 10,000     $ 10,000     $ -       2  
2019                             $ -     $ -       -  
        Total                     $ 66,090     $ -          

 

Cumulative Paid Losses and Loss Adjustment Expenses

 

For the Years Ended December 31,

(in thousands)

 

Accident Year     2016     2017     2018     2019              
2016     $ 6,073     $ 16,073     $ 17,687     $ 17,689                  
2017             $ 36,293     $ 38,401     $ 38,401                  
2018                     $ 6,000     $ 10,000                  
2019                             $ -                  
        Total                     $ 66,090                  
  Reserve for loss and loss adjustment expenses at December 31, 2019, net of reinsurance                           $ -                  

 

Historical average annual percentage payout

Years

  1     2     3     4  
                         
Property Catastrophe Reinsurance     62.9 %     34.0 %     9.1 %     0.0 %
v3.20.1
Loss Per Share (Tables)
12 Months Ended
Dec. 31, 2019
Earnings Per Share [Abstract]  
Schedule of earnings per share, basic and diluted
    Years ended December 31  
    2019     2018  
Numerator:            
     Net loss   $ (305 )     (5,749 )
                 
Denominator:                
    Weighted average shares - basic     5,733,587       5,733,587  
    Effect of dilutive securities - Stock options     -       -  
    Shares issuable upon conversion of warrants     -       -  
    Weighted average shares - diluted     5,733,587       5,733,587  
Loss per share - basic   $ (0.05 )     (1.00 )
Loss per share - diluted   $ (0.05 )     (1.00 )
v3.20.1
Stock-Based Compensation (Tables)
12 Months Ended
Dec. 31, 2019
Share-based Payment Arrangement [Abstract]  
Summary of stock option activity
   

Number

of

Options

   

Weighted Average

Exercise

Price

   

Weighted-Average Remaining

Contractual

Term

   

Aggregate

Intrinsic

Value ($000)

 
                         
Outstanding at January 1, 2018     250,000                          
Outstanding at December 31, 2018     250,000     $ 6.01       6.4 years          
Granted     290,000     $ 2.00                  
Outstanding at December 31, 2019     540,000     $ 3.86       7.4 years     $ -  
Exercisable at December 31, 2019     291,250     $ 5.26       6.1 years     $ -  
Schedule of stock options, valuation assumptions
    2019  
       
Expected dividend yield     0 %
Expected volatility     31 %
Risk-free interest rate     2.59 %
Expected life (in years)     10  
Per share grant date fair value of options issued   $ 0.36  
v3.20.1
Leases (Tables)
12 Months Ended
Dec. 31, 2019
Leases [Abstract]  
Operating lease obligations

(in thousands)

 

For the Three-Month Period

Ended 

December 31,

2019

   

For the Twelve-Month Period

Ended 

December 31,

2019

 
Operating Lease Cost (1)   $ 22     $ 85  
                 
Cash paid for amounts included in the measurement of lease liabilities                
Operating cash flows from operating leases   $ 22     $ 93  

 

(1) Includes short-term leases

 

(in thousands)

  At December 31, 2019  
Operating lease right-of-use assets   $ 133  
         
Operating lease liabilities   $ 133  
         
Weighted-average remaining lease term - operating leases     4.17 years  
         
Weighted-average discount rate - operating leases     6.5 %
         

 

Future minimum lease payments

(in thousands)

  At December 31, 2019  
Remainder of 2019   $ -  
2020     36  
2021     36  
2022     37  
2023     37  
Thereafter     6  
Total future minimum lease payments   $ 152  
         
Less imputed interest     (19 )
Total operating lease liability   $ 133  
v3.20.1
Related Party Transactions (Tables)
12 Months Ended
Dec. 31, 2019
Related Party Transactions [Abstract]  
Schedule of premium receivable, loss experience refund repayable and unearned premiums
    December 31,  
    2019     2018  
    (in thousands)  
             
Revenue            
Change in loss experience refund payable   $ -     $ 225  
Change in unearned premiums reserve   $ -     $ 592  
v3.20.1
Property and Equipment, Net (Tables)
12 Months Ended
Dec. 31, 2019
Property, Plant and Equipment [Abstract]  
Property and equipment, net
    At December 31,  
    2019     2018  
             
Leasehold improvements   $ 21       21  
Furniture and Fixtures     38       38  
Motor vehicle     21       21  
Computer equipment and software     33       32  
     Total, at cost     113       112  
      less accumulated depreciation and amortization     (104 )     (94 )
Property and equipment, net   $ 9       18  
v3.20.1
Organization and Basis of Presentation (Details Narrative)
12 Months Ended
Dec. 31, 2019
Segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Equity method investment, ownership percentage 100.00%
Number of business operating segments 1
v3.20.1
Significant Accounting Policies (Details Narrative) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Impairments in fixed assets $ 0 $ 0
Allowance for uncollectible receivables $ 0 $ 0
Furniture and Fixtures    
Fixed asset, estimated useful life 5 years  
Computer Equiment    
Fixed asset, estimated useful life 5 years  
Motor Vehicles    
Fixed asset, estimated useful life 4 years  
v3.20.1
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents (Details) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Cash and Cash Equivalents [Abstract]    
Cash on deposit $ 3,456 $ 3,965
Cash held with custodians 2,506 4,109
Restricted cash held in trust 2,054 3,225
Total $ 8,016 $ 11,299
v3.20.1
Investments (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Debt Securities, Available-for-sale [Line Items]  
Cost or Amortized Cost, Total available-for-sale securities $ 991
Gross Unrealized Gain, Total available-for-sale securities 2
Gross Unrealized Loss, Total available-for-sale securities 0
Estimated Fair Value, Total available-for-sale securities 993
Fixed Maturities  
Debt Securities, Available-for-sale [Line Items]  
Cost or Amortized Cost, Total available-for-sale securities 991
Gross Unrealized Gain, Total available-for-sale securities 2
Gross Unrealized Loss, Total available-for-sale securities 0
Estimated Fair Value, Total available-for-sale securities $ 993
v3.20.1
Investments (Details 1) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Fixed Maturities    
Debt Securities, Available-for-sale [Line Items]    
Proceeds $ 994 $ 8,340
Gross Realized Gains 3 7
Gross Realized Losses $ 0 (22)
Equity Securities    
Debt Securities, Available-for-sale [Line Items]    
Proceeds   7,617
Gross Realized Gains   475
Gross Realized Losses   $ (715)
v3.20.1
Investments (Details 2) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Cash and cash equivalents $ 5,962  
Restricted cash and cash equivalents 2,054 $ 3,225
Total available-for-sale securities   993
Total equity securities 692  
Total securities   1,155
Total 8,708 12,454
Fixed Maturities    
Total available-for-sale securities   993
Fair Value, Measurements, Recurring    
Cash and cash equivalents 5,962 8,074
Restricted cash and cash equivalents 2,054 3,225
Fair Value, Measurements, Recurring | Equity Securities    
Total equity securities 692 162
Fair Value, Measurements, Recurring | Fixed Maturities    
Total available-for-sale securities   993
Fair Value, Measurements, Recurring | Fixed Maturities | US Treasury and Government    
Total available-for-sale securities   993
Fair Value, Inputs, Level 1    
Total securities   162
Total 8,708 12,454
Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring    
Cash and cash equivalents 5,962 8,074
Restricted cash and cash equivalents 2,054 3,225
Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring | Equity Securities    
Total equity securities 692 162
Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring | Fixed Maturities    
Total available-for-sale securities   0
Fair Value, Inputs, Level 1 | Fair Value, Measurements, Recurring | Fixed Maturities | US Treasury and Government    
Total available-for-sale securities   0
Fair Value, Inputs, Level 2    
Total securities   993
Total 0 0
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring    
Cash and cash equivalents 0 0
Restricted cash and cash equivalents 0 0
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring | Equity Securities    
Total equity securities 0 0
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring | Fixed Maturities    
Total available-for-sale securities   993
Fair Value, Inputs, Level 2 | Fair Value, Measurements, Recurring | Fixed Maturities | US Treasury and Government    
Total available-for-sale securities   993
Fair Value, Inputs, Level 3    
Total securities   0
Total 0 0
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring    
Cash and cash equivalents 0 0
Restricted cash and cash equivalents 0 0
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | Equity Securities    
Total equity securities $ 0 0
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | Fixed Maturities    
Total available-for-sale securities   0
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Recurring | Fixed Maturities | US Treasury and Government    
Total available-for-sale securities   $ 0
v3.20.1
Investments (Details Narrative) - USD ($)
$ in Thousands
Dec. 31, 2019
Dec. 31, 2018
Amortized Cost and Fair Value Debt Securities [Abstract]    
Fair value of securities held in trust accounts $ 0 $ 993
v3.20.1
Reserve for Losses and Loss Adjustment Expenses (Details) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward]    
Balance, beginning of period $ 4,108 $ 4,836
Incurred, net of reinsurance, related to: Current period 0 10,000
Incurred, net of reinsurance, related to: Prior period (106) (1,006)
Total incurred, net of reinsurance (106) 8,994
Paid, net of reinsurance, related to: Current period 0 (6,000)
Paid, net of reinsurance, related to: Prior period (4,002) (3,722)
Total paid, net of reinsurance (4,002) (9,722)
Balance, end of period 0 4,108
Add: reinsurance recoverable 0 0
Gross balance, end of period $ 0 $ 4,108
v3.20.1
Reserve for Losses and Loss Adjustment Expenses (Details 1)
$ in Thousands
Dec. 31, 2019
USD ($)
Claims
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance $ 66,090      
Total of Incurred but Not Reported Liabilities Plus Expected Development on Reported Claims 0      
Cumulative Paid Losses and Loss Adjustment Expenses, Net of Reinsurance 66,090      
Reserve for loss and loss adjustment expenses, net of reinsurance 0      
Accident Year 2016        
Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance 17,689 $ 17,795 $ 18,801 $ 14,775
Total of Incurred but Not Reported Liabilities Plus Expected Development on Reported Claims $ 0      
Cumulative Number of Reported Claims | Claims 5      
Cumulative Paid Losses and Loss Adjustment Expenses, Net of Reinsurance $ 17,689 17,687 16,073 $ 6,073
Accident Year 2017        
Incurred Losses and Loss Adjustment Expenses, Net of Reinsurance 38,401 38,401 38,401  
Total of Incurred but Not Reported Liabilities Plus Expected Development on Reported Claims $ 0      
Cumulative Number of Reported Claims | Claims 8      
Cumulative Paid Losses and Loss Adjustment Expenses, Net of Reinsurance $ 38,401 38,401 $ 36,293