Company: OXBRW
Filing Date: 2025-03-26
Form Type: 10-K
Source: 0001641172-25-000736
Chunk: 292

Company: OXBRIDGE RE HOLDINGS Ltd
Filing Date: 2025-03-26
Form: 10-K
Item: Item 1
Chunk 292
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    enhance the ceding company’s
    financial strength and statutory capital.

When
reinsurance companies purchase reinsurance to cover their own risks assumed from ceding companies, this is known as retrocessional reinsurance.
Reinsurance or retrocessional reinsurance can benefit a ceding company or reinsuring company, referred to herein as a “retrocedant,”
as applicable, in various ways, such as by reducing exposure to individual risks and by providing catastrophe protection from larger
or multiple losses. Like ceding companies, retrocedants can use retrocessional reinsurance to manage their overall risk profile or to
create additional underwriting capacity, allowing them to accept larger risks or to write more business than would otherwise be possible,
absent an increase in their capital or surplus.

Reinsurance
contracts do not discharge ceding companies from their obligations to policyholders. Ceding companies therefore generally require their
reinsurers to have, and to maintain, either a strong financial strength rating or security, in the form of collateral, as assurance that
their claims will be paid.

Insurers
generally purchase multiple tranches of reinsurance protection above an initial retention elected by the insurer. The amount of reinsurance
protection purchased by an insurer is typically determined by the insurer through both quantitative and qualitative methods. In the event
of losses, the amount of loss that exceeds the amount of reinsurance protection purchased is retained by the insurer.

As
a program is constructed from the ground up, each tranche added generally has a lower probability of loss than the prior tranche and
therefore is generally subject to a lower reinsurance premium charged for the reinsurance protection purchased. Insurer catastrophe programs
are typically supported by multiple reinsurers per program.

6

Reinsurance
brokers play an important role in the reinsurance market. Brokers are intermediaries that assist the ceding company in structuring a
particular reinsurance program and in negotiating and placing risks with third-party reinsurers. In this capacity, the broker is selected
and retained by the ceding company on a contract-by-contract basis, rather than by the reinsurer. Though brokers are not parties to reinsurance
contracts, reinsurers generally receive premium payments from brokers rather than ceding companies, and reinsurers that do not provide
collateralized reinsurance are frequently required to pay amounts owed on claims under their policies to brokers. These brokers, in turn,
pay these amounts to the ceding companies that have reinsured a portion of their