Tokenized Reinsurance Expansion Will Drive Long Term Earnings Stability And Diversified Revenue Streams

Catalysts

About Oxbridge Re Holdings

Oxbridge Re Holdings provides fully collateralized property catastrophe reinsurance and, through SurancePlus, offers tokenized reinsurance securities on blockchain platforms.

What are the underlying business or industry changes driving this perspective?

• Scaling SurancePlus tokenized reinsurance products within a large global reinsurance market that exceeds $700 billion should support higher fee based revenue and diversify earnings beyond traditional underwriting cycles.
• Growing global adoption of blockchain based real world assets and digital securities, combined with Oxbridge early mover status in tokenized reinsurance, can expand its investor base and improve capital efficiency, supporting top line growth and higher return on equity.
• Consistent outperformance of recent Balanced Yield and High Yield CatRe tokens relative to targeted returns, alongside fully collateralized, low leverage structures, positions the company to command improved pricing and attract repeat capital, which should strengthen margins and earnings stability.
• Ongoing investment in compliant distribution channels, investor relations and marquee Web3 and reinsurance conferences is building brand recognition and pipeline visibility, which is likely to drive higher issuance volumes and recurring fee income over time.
• Potential introduction of more frequent dividend style payouts on CatRe tokens aligns products with evolving Web3 investor preferences, which could increase token demand, improve capital raise velocity and ultimately enhance revenue and net income growth.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Oxbridge Re Holdings's revenue will grow by 68.0% annually over the next 3 years.
• Analysts assume that profit margins will increase from -109.7% today to 5.2% in 3 years time.
• Analysts expect earnings to reach $593.9 thousand (and earnings per share of $0.07) by about December 2028, up from $-2.7 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 86.7x on those 2028 earnings, up from -3.6x today. This future PE is greater than the current PE for the US Insurance industry at 13.4x.
• Analysts expect the number of shares outstanding to grow by 3.13% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.96%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Oxbridge operates in low frequency, high severity catastrophe lines and has already recorded a full limit loss related to Hurricane Milton, highlighting that increasing climate volatility and more intense weather events could lead to elevated loss ratios and sustained pressure on net income and margins.
• The push into tokenized reinsurance and Web3 real world assets requires heavy ongoing spending on technology, legal, investor relations and marketing, which has already driven the expense ratio above 150 percent, and if scale is slower than expected these structurally higher costs could erode profitability and delay a sustained improvement in earnings.
• The long-term success of SurancePlus depends on broader adoption of blockchain based securities by regulators and mainstream investors, and if regulatory frameworks tighten or institutional demand for digital assets plateaus, fee and premium growth from tokenized products could fall short of expectations and limit revenue expansion.
• Oxbridge remains a small player competing against large, well capitalized reinsurers in a cyclical market where pricing can soften as alternative capital and traditional capacity grow, which could compress underwriting margins, reduce premium rates and undermine growth in total revenue and book value per share.
• The company has recently raised capital via a registered direct offering and continues to rely on capital markets and premium deposits to fund growth, so any deterioration in market sentiment towards small cap financial or Web3 exposed names could raise its cost of capital, constrain underwriting capacity and weigh on future earnings per share.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of $5.0 for Oxbridge Re Holdings based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be $11.5 million, earnings will come to $593.9 thousand, and it would be trading on a PE ratio of 86.7x, assuming you use a discount rate of 7.0%.
  
• Given the current share price of $1.25, the analyst price target of $5.0 is 75.0% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.