Company: OXBRW
Filing Date: 2025-03-26
Form Type: 10-K
Source: 0001641172-25-000736
Chunk: 596

Company: OXBRIDGE RE HOLDINGS Ltd
Filing Date: 2025-03-26
Form: 10-K
Item: Item 1C
Chunk 596
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-K.

Exposure
to Catastrophes

As
with other reinsurers, our operating results and financial condition could be adversely affected by volatile and unpredictable natural
and man-made disasters, such as hurricanes, windstorms, earthquakes, floods, fires, riots and explosions, and particularly to weather
events in the State of Florida. Although we attempt to limit our exposure to levels, we believe are acceptable, it is possible that an
actual catastrophic event or multiple catastrophic events could have a material adverse effect on our financial condition, results of
operations and cash flows. As described under “CRITICAL ACCOUNTING POLICIES—Reserves for Losses and Loss Adjustment Expenses”
below, under accounting principles generally accepted in the United States of America (“GAAP”), we are not permitted to establish
loss reserves with respect to losses that may be incurred under reinsurance contracts until the occurrence of an event which may give
rise to a claim. As a result, only loss reserves applicable to losses incurred up to the reporting date may be established, with no provision
for a contingency reserve to account for expected future losses.

CRITICAL
ACCOUNTING POLICIES

We
are required to make estimates and assumptions in certain circumstances that affect amounts reported in our consolidated financial statements
and related footnotes. We evaluate these estimates and assumptions on an on-going basis based on historical developments, market conditions,
industry trends and other information that we believe to be reasonable under the circumstances. These accounting policies pertain to
fair value measurements, particular with respect to our investment in Jet.AI., premium revenues and risk transfer, reserve for loss and
loss adjustment expenses, and deferred acquisition costs.

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;

38

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