Bermuda Angle: a life re player emerges from the Bermuda hothouse.

Bermuda's insurance and reinsurance sector has traditionally concentrated on the property/casualty lines. Lately, however, life, health and annuity lines have been cropping up more frequently. Many of the large Bermuda companies --14 now have capital and surplus in excess of a billion dollars -- have operations or investments on the life side. Among the smaller companies are several whose main business is life-related.

One such company is the up-and-coming Scottish Antiuity & Life Holdings Ltd. Formed in the Cayman Islands, where it is still registered, Scottish moved its headquarters to Bermuda in April2001. Chairman and CEO Michael French said at the time that "Bermuda is capital of the global insurance industry."

The move has proved successful for Scotfish. Less than five years old, the company has built a global platform for its life reinsurance and wealth management operations, attracted a strong partner in Pacific Life, and raised an additional $230 million in 2002 through a mix of capital and debt.

Scottish is French's brainchild. In 1993, he founded Maverick Capital in the Caymans, and the company went on to become one of the largest hedge funds in the world.

French is a no-nonsense Texan. The president of Scottish is an urbane ex-Wall Streeter, Scott Willkomm. Scottish Re (formerly Harbourton Assurance), the US life reinsurer, is run by Oscar (Ozzie) Scofleld, coaxed out of retirement to bring experience and industry knowledge to the boardroom and the trenches.

On the board: Lord Norman Lamont, Chancellor of the Exchequer under former British Prime Ministers Thatcher and Major; former US Energy Secretary Hazel O'Leary; Michael Austin, a director of the Cayrnan Islands Monetary Authority; and Glenn Schafer and Kanh Tran, president and chief financial officer, respectively, of Pacific Life.

The Pacific connection came about when Scottish purchased World-Wide Reassurance and its parent company World-Wide Holdings, from Pacific Life Insurance, in a $78 million stock-for-stock deal that closed Dec. 31, 2001, and gave Scottish a global base. World-Wide operates in 45 countries and has particular strength in the Middle East, South America and Japan and less well-trodden places such as Turkey and Cyprus. Last summer, Scottish opened a Luxembourg office to feed its wealth management business.

As of Sept. 30, 2002, Scottish had equity of $481.7 million. Total assets of $2.9 billion included a $2.0 billion portfolio. Total revenues for the first nine months of 2002 were $197.4 million, an increase of 154% from a year earlier. Net income Sept. 30,2002, was $19.9 million, up 51% from a year earlier.

Scottish writes life reinsurance in three areas: traditional, financial and international solutions.

Traditional life reinsurance of mortality business is written predominantly on an automatic basis for new policies that meet treaty criteria. The result is a homogeneous portfolio of U.S. lives reinsured. Traditional life reinsurance provides the top 60 life insurers with fully underwritten, first-dollar, quota share treaties.

The company's average exposure for North American lives reinsured is about $50,000. Maximum exposure for any individual life is $500,000. Maximum exposure to any particular event is $750,000.

Much of what Scottish reinsures in its reinsurance business is fixed annuity blocks, including contracts under which it assumes the risks of existing, newly-written and closed blocks of business. Products reinsured include fixed annuities and other asset-accumulation and annuity-type products, cash value life insurance and, to a lesser extent, disability products.

Acquired solutions is the Scottish term for administrative insurance. The company specializes in alternative risk transfer solutions for life and annuity insurance companies, banks and other financial services organizations, independent marketing organizations and brokers.

The company's wealth management arm offers variable life insurance and variable annuity products to high net worth individuals worldwide.

From this mix of niches has emerged a solid life reinsurance player. Once again the Bermuda hothouse effect appears to be in full swing.