Company: OXBRW
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001641172-25-023960
Chunk: 53

Company: OXBRIDGE RE HOLDINGS Ltd
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 53
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 that are actively involved in the relevant markets.

33

Premium
Revenue and Risk Transfer. We record premiums revenue as earned pro-rata over the terms of the reinsurance agreements and the
unearned portion at the 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.

We
account for reinsurance contracts in accordance with ASC 944, ‘‘Financial Services – Insurance.” Assessing whether
or not a reinsurance contract meets the conditions for risk transfer requires judgment. The determination of risk transfer is critical
to reporting premiums written. If we determine that a reinsurance contract does not transfer sufficient risk, we must account for the
contract as a deposit liability.

Reserves
for Losses and Loss Adjustment Expenses. We determine our reserves for losses and loss adjustment expenses on the basis of the
claims reported by our ceding insurers and for losses IBNR, we use 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.

We
believe that the amounts are adequate; however, the inherent impossibility of predicting future events with precision, results in uncertainty
as to the amount which will ultimately be required for the settlement of losses and loss expenses, and the differences could be material.
Adjustments are reflected in the consolidated statements of income in the period in which they are determined.

Under
GAAP, we are not permitted to establish loss reserves until the occurrence of an actual loss event. As a result, only loss reserves applicable
to losses incurred up to the reporting date may be recorded, with no allowance for the provision of a contingency reserve to account
for expected future losses. Losses arising from future events, which could be substantial, are estimated and recognized at the time the
loss is incurred.

During
the quarter and six months ended June 30, 2025, the attachment layer reinsured by the Company under one of its contract was
penetrated as a result of adverse loss development from Hurricane Milton. As a result, at June 30, 2025, the Company has recorded a
reserve for losses and LAE of $175,000 based on the contractual maximum loss ($2,293) the Company can suffer under of the contracts,
less advanced payments made during the quarter and six