Company: OXBRW
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001641172-25-009673
Chunk: 16

Company: OXBRIDGE RE HOLDINGS Ltd
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 2
Chunk 16
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insurance 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.

As at March 31,
2025 we had no reserves for loss and loss adjustment expenses due to no significant events occurring during the period and no
reported claims payments penetrating the Company’s reinsurance layers on contracts in force during the current treaty period. See Note 7 to the consolidated
financial statements.

Our reserving methodology does
not lend itself well to a statistical calculation of a range of estimates surrounding the best point estimate of our reserve for loss
and loss adjustment expense. Due to the low frequency and high severity nature of claims within much of our business, our reserving methodology
principally involves arriving at a specific point estimate for the ultimate expected loss on a contract-by-contract basis, and our aggregate
loss reserves are the sum of the individual loss reserves established.

Deferred Acquisition Costs.
We defer certain expenses that are directly related to and vary with producing reinsurance business, including brokerage fees
on gross premiums assumed, premium taxes and certain other costs related to the acquisition of reinsurance contracts. These costs are
capitalized and the resulting asset, deferred acquisition costs, is amortized and charged to expense in future periods