Oxbridge Re raising reinsurance sidecar funds with EpsilonCat Re tokenized securities
Oxbridge Re Ltd., the Cayman Islands based reinsurance company, has launched its second reinsurance sidecar fundraising effort through the sale of up to $10 million of EpsilonCat Re tokenized reinsurance securities issued by its subsidiary SurancePlus Inc.
Oxbridge Re launched its Web3 startup SurancePlus in 2022, with a plan to issue tokenized reinsurance securities using the Avalanche blockchain.
The reinsurer raised $2.4 million through the sale of the first series of digital or tokenized reinsurance securities, which were named DeltaCat Re.
That $2.4 million of capital was used to support collateralized reinsurance contracts, underwritten via its sidecar structure, Oxbridge Re NS.
The securities representeded fractionalized interests in reinsurance contracts written by its reinsurance sidecar, Oxbridge Re NS, with investors benefiting from a return through the performance of the underlying reinsurance contracts that sat in the sidecar.
As we reported, towards the end of 2023, Oxbridge Re was anticipating that investors in the first series of tokenized reinsurance securities would receive a roughly 42% return for the first treaty year.
Which was a very impressive headline figure and the company will be hoping it can capitalise on this to raise a larger amount of capital under the EpsilonCat Re series of securities that will be issued for the 2024 renewal at the mid-year.
SurancePlus has launched an offering of Participation Shares that will be represented by the EpsilonCat Re digital tokens and will be issued under a 3-year Participation Share Investment Contract.
Up to 1 million participation shares are set to be issued, with each represented by a token and having an initial price of $10.00 per share.
Hence Oxbridge Re is looking to raise as much as $10 million for its sidecar through these EpsilonCat Re reinsurance tokens.
The proceeds of the sale will be used by SurancePlus to purchase one or more participating notes of Oxbridge Re NS, the reinsurance sidecar structure.
While, the proceeds from the sale of those participating notes will be invested in collateralized reinsurance contracts that are underwritten by Oxbridge Re NS.
A filing states that the holders of the Participation Shares will “generally be entitled to proceeds from the payment of the participating notes in the amount of a preferred return equal to the initial Participation Share price, plus 20%, and then 80% of any proceeds in excess of the amount necessary to pay the preferred return.”
As we’ve said before, digital or tokenized reinsurance securities may be considered by many to be an added layer of complexity on top of an investment product that is already institutionally focused, but they do have the potential to broaden the appeal and bring in different investors as well.
More interesting might be if investors had the option to trade the digital EpsilonCat Re reinsurance tokenized securities on the Avalanche chain, bringing in a secondary trading element that could be digitalised.
