Company: OXBRW
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001493152-25-021063
Chunk: 51

Company: OXBRIDGE RE HOLDINGS Ltd
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 1
Chunk 51
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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, 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;

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 and management. The investment custodians
and management 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.

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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