Good afternoon. Welcome to Oxbridge Re's first quarter 2022 earnings call. My name is Chris and I will be your conference operator this afternoon. At this time, all participants will be in a listen-only mode. Joining us for today's presentation is Oxbridge Re's Chairman, President, and Chief Executive Officer, Jay Madhu, and Chief Financial Officer and Corporate Secretary, Wrendon Timothy. Following their remarks, we will open the call up for your questions. I would like to remind everyone that this call is also being broadcast live via webcast and available in the webcast replay until June 11, 2022 on the investor information section of the Oxbridge Re website at www.oxbridgere.com.
Now I would like to turn the call over to Wrendon Timothy, Chief Financial Officer of Oxbridge Re, who will provide the necessary cautions regarding the forward-looking statements that will be made by management during this call.
Thank you, operator. During today's call, there will be forward-looking statements with regard to future events, including Oxbridge Re's future financial performance. These forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as anticipate, estimate, expect, intends, plans, projects, and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions, rather are subject to various risks and uncertainties. A detailed discussion of these risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled Risk Factors contained in our Form 10-K filed on March 30, 2022, and our Form 10-Q filed today, May 12, 2022 with the Securities and Exchange Commission.
The occurrence of any of these risks and uncertainties could have a material adverse effect on the company's business, financial condition, and the volatility of our earnings, which in turn can cause significant market price and trading volume fluctuations for our securities. Any forward-looking statements made on this conference call speak only as of the date of this conference call. Except as required by law, the company undertakes no obligation to update any forward-looking statements contained on this call and the company's presentation, even if the company's expectations on any related events, conditions or assumptions change. Now, I would like to turn the call over to our Chairman, President, and Chief Executive Officer, Jay Madhu. Jay?
Thank you, Wrendon, and welcome everyone. Thank you for joining us today. As we have done over the past two years, we've continued to monitor how the ongoing COVID-19 pandemic affects our markets and our business, and we will continue to adapt to any issues that arise. As we do each quarter, before we get into our results, I would like to take a moment to provide a brief overview of our company. Oxbridge Re Holdings Limited was founded over nine years ago with a mission to provide reinsurance solutions primarily to property and casualty insurers in the Gulf Coast region of the United States. Through our licensed reinsurance subsidiary, Oxbridge Reinsurance Limited, and our licensed reinsurance sidecar, Oxbridge Re NS, we write fully collateralized policies to cover property losses from specific catastrophes. Since we write fully collateralized contracts, we believe we can compete effectively with large carriers.
We specialize in underwriting low frequency, high severity risks, where we believe sufficient data exists to effectively analyze the risk return profile of reinsurance contracts. Our objective is to achieve long-term growth in book value per share by writing business on a selective and opportunistic basis that will generate attractive underwriting profits relative to risk. Regarding our investment portfolio, we remain opportunistic and will deploy capital when favorable return opportunities arise that can contribute to the growth of capital and surplus in our licensed reinsurance subsidiaries over time. Clearly, the current volatility being experienced in the global financial markets is impacting our investment portfolio. As we experienced in the first quarter of 2022 with the unrealized losses. However, we remain steadfast in ensuring we stay in close touch with the global markets and will react as necessary.
We are also very pleased to have completed our investment in the Oxbridge Acquisition Corp early August of last year, a special purpose acquisition company or SPAC focused on disruptive technology. We believe innovators and entrepreneurs in such businesses as DeFi, blockchain, InsurTech or AI offer a real and significant opportunity to build value for our investors over the long term. We look forward to keeping you updated on its progress. Turning to our results for the first quarter of 2022, following much stronger performance in 2021 from our operational perspective, we were pleased with the results of Q1 of the new year. Revenues were up, however, the unrealized negative change in fair value of our equity securities and other investments led to a net loss for the quarter.
Looking ahead, while we are confident of our core reinsurance business, we continue to be cautious and optimistic. We are also excited about the potential value in the investment for our SPAC to bring to our shareholders in the future. Now I'll turn this over to Wrendon to take us through our financial results. Wrendon?
Thank you, Jay. I would like to remind you that our typical contract period is from June 1 to May 31st of the following year. With respect to net premiums earned, net premiums earned increased in the first quarter of 2022 primarily due to a higher weighted average rate on our reinsurance contracts in force during the period, and there were no reported losses during the three months ending March 31, 2022. Our net investment and other income rose moderately in the quarter, primarily due to the administrative fee income related to the SPAC investment. Additionally, we generated realized gains of $7,000 due to sales of equity securities during the quarter. However, as Jay mentioned, we had an unrealized loss of $230,000 due to the negative fair value change in our equity investment in Oxbridge Acquisition Corp.
We also recognized a $20,000 negative change in the fair value of our equity securities compared to a gain of $124,000 in Q1 of 2021. All of the factors taken together resulted in total revenue amounting to $0 during the quarter compared to $390,000 in the prior year first quarter. Total expenses, which includes loss and loss adjustment expenses, policy acquisition costs, and general and admin expenses were up in the quarter due primarily to an increase in operating expenses resulting from increased personnel and other expenses, including inflationary fluctuations. We had a net loss of $387,000 in the first quarter of 2022 compared to a net loss of $28,000 last year, primarily due to the unrealized negative change in the fair value of our equity securities and other investments.
Turning to the financial ratios, as we have discussed before on our investor call, we use various measures to analyze our growth and profitability of our core business operations. For reinsurance business, we measure underwriting profitability by examining our loss ratio, acquisition cost ratio, expense ratio, and combined ratio. Our loss ratio, which measures underwriting profitability, is a ratio of loss and loss adjustment expenses incurred to net premiums earned. For both the first quarters of 2022 and 2021, our loss ratio was 0 as there were no losses or loss adjustment expenses in either period. Our acquisition cost ratio, which measures operational efficiency, compares policy acquisition costs to net premiums earned. Acquisition cost ratio remains consistent and stable at 11% in both quarters. Our expense ratio, which measures operating performance, compares policy acquisition costs and general and administrative expenses with net premiums.
The expense ratio increased in the quarter due to the higher general and admin expenses compared to last year. Our combined ratio, which is used to measure underwriting performance, is the sum of the loss ratio and the expense ratio. This ratio increased to 103% in the third quarter from 157% last year, again due to the higher general and admin expense costs during the quarter. Now turning to the balance sheet. Our investment portfolio increased to $765,000 at March 31, 2022, from $5,700 at year-end, due primarily to the net purchase of equity securities in the quarter. Other investments, which is our investment in the SPAC, declined $230,000, as mentioned, due to the negative change in the fair value of our investment in Oxbridge Acquisition Corp.
Cash and cash equivalents and restricted cash and cash equivalents decreased and stood at $5.1 million at March 31, 2022, compared to $5.4 million at December 31, 2021. Total shareholder equity at March 31, 2022, stood at $16.3 million. Now I would like to turn the call back over to Jay to wrap up before we take some of your questions. Jay?
Thank you, Wrendon Timothy. As previously mentioned, through our reinsurance subsidiary, we look to invest close to 50% of our equity. Last year was no different. Between our reinsurance contracts and through investments in OAC Sponsor Ltd, the sponsor of the SPAC, we have stuck to that resolve. While Oxbridge was the lead investor in the SPAC, some of the risk capital was laid off to additional investors in the sponsor at a higher share price. The result being that despite the fact that Oxbridge contributed approximately 34.7% of the risk capital, Oxbridge economics are significantly maximized in that it owns approximately 49.6% and 63.1% of the ordinary shares and preferred shares respectively of the sponsor, which tracks the Class B shares and private placement warrants respectively in the SPAC.
Thus our investment further diversifies our business and positions us to capitalize on growth in the emerging disruptive technologies being developed. We are very excited about the future value of our investments and the potential that Oxbridge Acquisition Corp could bring to our shareholders. Looking ahead, we remain optimistic about the long-term prospects of our business. As always, we continue to evaluate additional opportunities for growth as well as for the diversification of our risk profile. In closing, our business is diversified. Our investment in Oxbridge Acquisition offers an entry into new technology businesses with focus on blockchain, insurtech, and artificial intelligence. We remain debt-free. We have a strong balance sheet with a solid cash position. Most importantly, we have real opportunity based on a viable business model that is well-placed on diversification. I will leave you with.
I will leave you with one thought, and that is opportunity. With that, we are ready to open the call for questions. Operator, please provide the appropriate instructions.
Thank you, sir. Ladies and gentlemen, at this time, please press star one on your telephone keypad if you have questions. That is star one on your telephone keypad if you have questions. Our first question will come from Kent Engelke of Capitol Securities Management. Please proceed.
Hey, Wrendon. Hey, Jay Madhu. I recognize that this is not a call about the SPAC. It's a call about Oxbridge. As you've said many times, Oxbridge does have a significant investment in the SPAC, and if I'm not mistaken, the SPAC raised about $160 million. Also, you know, everyone's very much aware that the environment for SPACs have changed dramatically. Simply speaking, how is it going? You know, which employees?
Yeah. Hey, Kent. Yes, you are right. It's. I can't say too much about the SPAC because it's a different company, but we do have an investment in that. I'd like to say at least a few words, right? With that, when we did the investment in the SPAC, we were always of the belief that if the market went well, we would be fine. If there were any gyrations in the market, there would be additional opportunity. That's exactly where we stand. We are extremely happy that we didn't do any twist of combinations over the last year when we went out, because that could have had a negative effect at this point. At the moment, the IPO market has seen a lot of challenges.
The SPAC market is seeing a lot of conversation. However, we're sitting on $116 million of cash in a tax neutral jurisdiction. When I say tax neutral jurisdiction, we're in the Cayman Islands. We adhere to economic substance and substantive presence. We're not a PO box company. We're not sitting in the U.S. while we're doing business in Cayman, saying we're doing business in Cayman. We are a legitimate Cayman Islands business. Companies in our focused direction, blockchain, AI, technology, those companies usually tend to scale outside of the U.S. As such, they would need a presence or they would appreciate a presence in a tax neutral jurisdiction, and here we are. While there's a lot of strife and there's a lot of concern, we're in a great position.
Valuations a few weeks ago, a few months ago, a few years ago have now come down to possibly reality. They may go down further, but whatever the case is, we're in a much better position, and we are able to take advantage of that, not only from where we sit, but also with our treasure trove of $116 million.
To make sure I hear you correctly, with the disruption in the SPAC market, I think that's positive, that's a pot of money at work that's been raised in, you know, August, September, October time period. Now valuations have come back to a more realistic level. You're sitting on $160 million for this package, excuse me, not $160 million. You're a viable entity in a country that has very favorable tax status, if I hear you correctly. Is that correct?
Yes, absolutely.
Cool. More of a generic question. In regards to Oxbridge's regular reinsurance business, how are you viewing this hurricane season?
Yeah. Reinsurance and insurance is a big hot topic in Florida. Florida is our geography that we tend to invest most of our money in. Southeast is our United States with a high focus in Florida. What we've seen over the last several months, there's been a lot of concern in the Florida market. You know, COVID has not done much. The war has not done much to help that either. Things are changing. The economy is changing drastically. Where we currently stand is, it's in a fantastic place because we have the opportunity to pick and choose, and we've always been very optimistic. Similarly, while we see there is some opportunity, we're very cautious about the market as we go forward.
I understand what you're saying. So being opportunistic, but also cautious. Long and short of it is we're all waiting to hear some positive news on the SPAC and the like. It is, again, I recognize you're not the SPAC company. But the delay to date has been very opportunistic for y'all. Because you advised about how to achieve the price that it was, you know, eight years ago or something like that. Look forward to hearing further news about the SPAC.
Excellent. Thank you, Kent.
Appreciate it. Thank you.
All right. Once again, ladies and gentlemen, that is star one on your telephone keypad for questions. Press star one on your telephone keypad for questions. Once again, please press star one on your telephone keypad for questions. Again, that's star one on your telephone keypad. Seeing no questions on the queue at this time, this concludes our question and answer session. I'd now like to turn the call back over to Mr. Madhu for his closing remarks.
Thank you for joining us on today's call. Before we wrap up, I want to thank our employees, business partners, and investors for their continued support. I especially want to express our gratitude to our Oxbridge team who continue to leverage their significant experience to manage and build our business during these challenging times. It's their dedication and expertise that will get us through these days, and we look forward to updating you on our next call. If you have any further questions, please give us a call anytime. Thank you again for your time and attention today and your interest in Oxbridge. Again, I will leave you with one thought, and that is opportunity. Thank you.
Before we conclude today's call, I would like to remind everyone that a recording of today's call will be available for replay via a link available on the Investors section of the company's website. Thank you for joining us today for our presentation. You may now disconnect.