Cayman Islands-based reinsurance firm Oxbridge Re Holdings Limited has a new British Virgin Islands subsidiary, SurancePlus, to issue tokenised reinsurance securities.
SurancePlus, incorporated in the BVI in December 2022, will issue tokenised securities that indirectly represent fractionalised interests in reinsurance contracts that will be underwritten by Oxbridge Re’s reinsurance subsidiary, Oxbridge Re NS, according to a press release.
The provider of reinsurance solutions to property and casualty insurers in the Gulf Coast region of the United States, said the token offering is expected to commence in the upcoming months.
Oxbridge Re Holdings president and chief executive officer Jay Madhu said high barriers to entry have traditionally excluded reinsurance as an alternative investment opportunity for many investors.
“SurancePlus will democratise access to reinsurance as an alternative investment opportunity by offering a solution that leverages key qualities of blockchain technology to create a well-designed digital security, the performance of which will not be correlated to the financial markets. Instead, the proceeds raised from the offering of the DeltaCat Re tokens will be invested in reinsurance contracts,” he said in the release.
“By complying with applicable U.S. securities laws, we expect to create significant shareholder value by raising additional capital through token issuance and investing these funds in underwriting higher value reinsurance contracts.”
Token holders will receive the right to a return on the investment from the performance of the underlying reinsurance contracts created by Oxbridge Re Holdings Limited.
In a profitable year, Oxbridge Re said it anticipates token holders could receive an annualised return of 20% to 40%.
Through its licensed reinsurance subsidiaries, Oxbridge Reinsurance Limited and Oxbridge RE NS, the firm writes fully collateralised policies to cover property losses from specified catastrophes.
Oxbridge Re specialises in underwriting medium-frequency, high-severity risks, where it believes sufficient data exists to analyse effectively the risk/return profile of reinsurance contracts.
The DeltaCat RE tokens will be offered to accredited investors in the United States by SurancePlus under Rule 506(c) of Regulation D and to non-US investors pursuant to Regulation S.
SurancePlus has partnered with Securitize LLC, an SEC-registered transfer agent, to implement these tokenised reinsurance securities on its Securitize.io platform.
Jamie Finn, president of Securitize, Inc said security tokens are an innovative way of both financing projects such as SurancePlus’ and enabling more investors to participate.
“With investors able to purchase fractional interests through a website and have their interest permanently and transparently recorded on a blockchain, investors can access opportunities that were typically out of reach,” he said. “SurancePlus is leveraging the Securitize platform to validate and onboard their investors, whose security tokens will be transacted and recorded on the blockchain.”
SurancePlus has also engaged Ogier BVI as its BVI counsel and Bull Blockchain Law LLP, as its US Securities and Exchange Commission counsel.
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