Oxbridge Re raises $2.88m for EpsilonCat Re tokenized reinsurance sidecar securities

Oxbridge Re Ltd., the Cayman Islands based reinsurance company, has announced the successful raising of $2.88 million for its sidecar structure through EpsilonCat Re tokenized reinsurance securities issued by its subsidiary SurancePlus Inc.

Oxbridge Re launched Web3 subsidiary SurancePlus in 2022, with a plan to issue tokenized reinsurance securities using the Avalanche blockchain.

Those tokenized reinsurance securities effectively provide funding to support the firm’s collateralized reinsurance sidecar vehicle Oxbridge Re NS.

The reinsurer raised $2.4 million through the sale of the first series of digital or tokenized reinsurance securities, which were named DeltaCat Re last year.

That $2.4 million of capital was used to support collateralized reinsurance contracts, underwritten via its sidecar structure, Oxbridge Re NS.

The company later reported that the DeltaCat Re series of tokenized reinsurance sidecar securities realised a 49% return for the investors backing them, surpassing both initial and updated expectations.

Earlier this year, the company announced it was beginning its second reinsurance sidecar capital raise through the sale of up to $10 million of EpsilonCat Re tokenized reinsurance securities.

Now, Oxbridge Re has reported raising $2.88 million for the EpsilonCat Re tokenized reinsurance securities issuance, so a little below its projection.

SurancePlus Inc., the digital securities subsidiary of Oxbridge, has completed a private placement of 287,705 Participation Shares represented by the digital tokens, EpsilonCat Re, under a 3-year Participation Share Investment Contract to raise this roughly $2.88 million.

For this latest set of digital reinsurance securities, Oxbridge Re said that the targeted return will be 42%.

The company said the strong 49% return from the previous DeltaCat Re issuance “underscores the potential of digital innovations in reinsurance and sets a positive precedent for future offerings like the EpsilonCat Re token.”

The EpsilonCat Re Tokens were sold to accredited investors in the United States under Rule 506(c) of Regulation D and to non-US investors pursuant to Regulation S of the US Securities Act 1933, as amended.

In addition today, Oxbridge Re announced that subsidiary SurancePlus has signed a partnership agreement with digital asset management specialist Zoniqx, who itself has announced a partnership with Ripple and PwC as part of their Tokenization & Digital Assets Scale program.

“This collaboration aims to further expand the footprint of SurancePlus as it revolutionizes the reinsurance industry by leveraging blockchain technology to tokenize reinsurance contracts and facilitate their deployment on blockchain ecosystems,” the company explained.

Jay Madhu, President and CEO of Oxbridge Re, said, “Last year, SurancePlus incorporated digital innovations and Web3 insights, democratizing access to reinsurance as an alternative investment. We believe we were the first publicly traded company to raise capital for catastrophe reinsurance risks through the sale of tokenized reinsurance securities.

“Building on that success, we are delighted to have partnered with Zoniqx and we believe their state-of-the-art tokenization and digital asset lifecycle management offerings will also further enhance our RWA Tokenization and Web-3 capabilities. We have also closed our 2024 EpsilonCat Re offering and are targeting returns of approximately 42%’’.

Co-Founder and CBO of Zoniqx, Sanjeev Birari, added, “This collaboration with Oxbridge Re and SurancePlus marks a significant milestone in advancing RWA tokenization. By leveraging our state-of-the-art TALM system and the DyCIST protocol, we are showcasing the reliability and versatility of our asset-agnostic technology in the reinsurance industry. Partnering with a listed NASDAQ company like Oxbridge Re speaks volumes about the robustness of our solutions. This partnership enhances transparency, security, and efficiency in the tokenization of reinsurance securities, validating our vision and unlocking new opportunities for investors. We’re thrilled to bridge traditional finance with digital ecosystems, reshaping the future of digital asset management and driving accessibility in financial markets.”

As we recently reported, a new ILS focused investment manager named Members Capital Management Ltd. is launching with a mission to (re)diversify sources of reinsurance capital using digital and tokenized assets.

The strategy of leveraging digital asset technology and architecture to facilitate fractionalised investments into reinsurance-linked securities is gaining traction, it seems.

It is an intriguing way to both modernise the matching of capital with insurance risk and also tap into differentiated sources of funding for ILS strategies.

Finally, as we had also reported earlier this year, Oxbridge Re announced that it is considering “strategic alternatives” for the business, including a potential sale or merger, various capital actions, or even spinning out its tokenized reinsurance investments unit.

View details of many reinsurance sidecar transactions in our directory.