Scottish Re Group Limited Announces Operating Results For The Second Quarter Ended June 30, 2005.HAMILTON Hamilton, city, Bermuda Hamilton, city (1990 est. pop. 3,100), capital of Bermuda, on Bermuda Island. It is a port at the head of Great Sound, a huge lagoon and deepwater harbor protected by coral reefs. , Bermuda Bermuda (bûrmy  `də), British dependency (2005 est. pop. 65,400), 21 sq mi (53 sq km), comprising some 150 coral rocks, islets, and islands (of which some 20 are inhabited), in the -- Scottish Re Group Limited (NYSE NYSESee: New York Stock Exchange :SCT Sacrococcygeal teratoma (SCT) A tumor occurring at the base of the fetus's tailbone. Mentioned in: Prenatal Surgery ) today reported that net income for the quarter ended June June: see month. 30, 2005 was $1.6 million, or $0.03 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ordinary share, as compared to $28.7 million, or $0.77 per diluted ordinary share for the prior year period. Net income for the six months ended June 30, 2005 was $35.0 million or $0.76 per diluted ordinary share, as compared to $38.8 million, or $1.04 per diluted ordinary share for the prior year period. Net operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before were $19.7 million, or $0.42 per diluted ordinary share for the quarter ended June 30, 2005 as compared to $18.1 million, or $0.49 per diluted ordinary share for the prior year period. Net operating earnings were $46.6 million, or $1.01 per diluted ordinary share for the six months ended June 30, 2005 as compared to $34.7 million or $0.93 per diluted ordinary share for the prior year period. "Net operating earnings" is a non-GAAP measurement. We determine net operating earnings by adjusting GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income by net realized capital gains and losses and the change in value of embedded Inserted into. See embedded system. derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. as adjusted for the related effects upon the amortization of deferred acquisition costs and taxes. While these items may be significant components in understanding and assessing the Company's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: financial performance, the Company believes that the presentation of net operating earnings enhances the understanding of its results of operations by highlighting earnings attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the normal, recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. operations of its reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. business. However, net operating earnings are not a substitute for net income determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP. Reconciliations to GAAP net income are provided in the following tables. The results for the quarter were negatively impacted by higher than expected mortality in the quarter that decreased net income and net operating earnings by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $11.2 million, or $0.24 per diluted share. "We are disappointed with the results for the quarter," said Scott E. Willkomm, President and Chief Executive Officer of Scottish Re Group Limited. "Unfortunately, a greater than expected number of large claims in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. caused us to miss our earnings expectations for the quarter." "However, it is important to put this in context and recall that we are in the business of accepting risk," he added. "While we take a long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. outlook when developing our expected returns Expected Return The average of a probability distribution of possible returns, calculated by using the following formula: , yet fluctuations in mortality can lead to short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. earnings volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the in any reporting period. If there wasn't was·n't Contraction of was not. wasn't was not wasn't be any volatility, ceding cede tr.v. ced·ed, ced·ing, cedes 1. To surrender possession of, especially by treaty. See Synonyms at relinquish. 2. companies would be less interested in reinsuring their business. Our job is to minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. that volatility to acceptable levels over the long term." "We minimize volatility by limiting our per-life exposures and maintaining very robust retrocession RETROCESSION, civil law. When the assignee of heritable rights conveys his rights back to the cedent, it is called a retrocession. Erskine, Prin. B. 3, t. 5, n. 1; Dict. do Jur. h.t. programs. Furthermore, we purchase special retro [Latin, Back; backward; behind.] A prefix used to designate a prior condition or time. coverage to minimize the potential volatility that can arise from per-life retentions that are greater than our own," he said. "Finally, we purchase catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). and clash coverage to protect ourselves from events beyond our control." Mr. Willkomm added, "The total number of claims in the second quarter was marginally mar·gin·al adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. less than what we experienced in the first quarter and consistent with expected levels. However, in the second quarter, we received three very large claims that together totaled $5.3 million. In total, we received 16 more claims in the second quarter with claim amounts greater than $500,000 than we expected." "The higher than expected number of large claims - which we define as claims in excess of $500,000 - did not come from any one ceding company and were not concentrated in any one block or segment of our business," he added. "We anticipate that our claims experience will revert re·vert v. 1. To return to a former condition, practice, subject, or belief. 2. To undergo genetic reversion. to more expected levels, but the nature of our business is such that our results will continue to be subject to mortality volatility that can impact our results in a positive or negative manner." On a trailing twelve months In commerce, the trailing twelve months (TTM) is a moving measurement (for example, an average or a sum) over the 12 previous months, using the most recent data available. Also sometimes known as last twelve months (LTM). basis, the Company's return on average equity - measured by dividing net operating earnings by average shareholders equity excluding the effect of FAS 115 and the change in fair value of embedded derivatives - was 11.2%. If the Company had not experienced adverse mortality this quarter, its return on average equity for the last twelve months would have been approximately 12.5%. Total revenue for the quarter increased to $503.8 million from $226.9 million for the prior year period, an increase of 122%. Excluding realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. and losses and the change in fair value of the embedded derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. , total revenue for the quarter increased to $525.0 million from $214.0 million for the prior year period, an increase of 145%. Total revenue for the six months ended June 30, 2005 increased to $1.1 billion from $406.1 million for the prior year period, an increase of 171%. Excluding realized gains and losses and the change in fair value of the embedded derivative, total revenue for the six months increased to $1.1 billion from $400.4 million for the prior year period, an increase of 175%. Total benefits and expenses increased to $510.6 million for the quarter from $199.9 million, an increase of 155%. For the six months ended June 30, 2005, total benefits and expenses increased to $1.0 billion from $367.8 million, an increase of 172%. The increases were principally driven by the acquisition of the ING individual life business and growth in the Company's reinsurance business in North America. The Company's operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. ratio (which is the ratio of operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. to total revenue excluding realized gains/losses and the change in value of embedded derivatives) for the last twelve months ended June 30, 2005 was 4.8%, as compared to an operating expense ratio of 6.7% for the year ended December December: see month. 31, 2004. Operating expenses in the second quarter were approximately $2 million greater than the first quarter of 2005 due to professional fees incurred in connection with our financial improvement project in our International business. The Company's total assets were $10.3 billion as of June 30, 2005. The core investment portfolio, comprising fixed maturity investments, preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. and most of the cash and cash equivalents, totaled $5.6 billion, and had an average quality rating of "AA-", an effective duration of 3.6 years and a weighted average book yield of 4.6%. This compares with a portfolio balance of $4.3 billion, an average quality rating of "AA-", effective duration of 3.8 years and an average book yield of 4.2% as of December 31, 2004. Funds withheld at interest, totaling $1.9 billion, had an average quality rating of "A", an effective duration of 5.2 years and a weighted average book yield of 5.8% at June 30, 2005. This compares with a total of $2.1 billion with an average quality rating of "A+", an effective duration of 3.9 years and an average book yield of 5.2% at December 31, 2004. The market value of the funds withheld at interest amounted to $1.9 billion at June 30, 2005. Mr. Willkomm added, "The integration of the ING Re business is progressing quite favourably Adv. 1. favourably - showing approval; "he reviewed the play favorably" favorably favourably U.S. favorably adverb 1. and is slightly ahead of what was anticipated at the time of the transaction. By the end of 2005, we expect to move all of our North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. administrative operations from Charlotte to Denver Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. and to migrate our administrative platform to an upgraded version of the ING Re administration system that was acquired during the course of the transaction." "In addition, new business production continues to be strong and during the second quarter, we added $38.5 billion of new traditional life reinsurance volume, bringing total 2005 new business to $87.5 billion." As of June 30, 2005, the Company had approximately $1.1 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. of gross life reinsurance in force covering 13.9 million lives with an average benefit per life of $74,000 in our North American operations North American operation Surgical oncology Radical surgery of a 'frozen pelvis', consisting of radical en bloc resection of the uterus and urinary bladder. See 'Frozen pelvis.'. Cf 'All-American' and 'South American' operations. . As of June 30, 2004, we had approximately $298 billion of life reinsurance in force covering 7.4 million lives with an average benefit per life of $40,000 in our North American operations. The Company's book value per share was $23.74 at June 30, 2005 as compared to $21.60 per share at December 31, 2004. Fully diluted book value per share was $20.13 at June 30, 2005 as compared to $19.43 at December 31, 2004. The Company's earnings conference call has been changed to 8:30 am (EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ) on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , July July: see month. 29, 2005. The dial-in number is (877) 502-2902 or (706) 679-5950 and the reservation A clause in a deed of real property whereby the grantor, one who transfers property, creates and retains for the grantor some right or interest in the estate granted, such as rent or an Easement ,a right of use over the land of another. number is 7550420. A replay of the call will be available beginning at 1:00 pm on Friday, July 29, 2005 and running through Thursday Thursday: see week. , August 18, 2005. The dial-in number for the replay is (800) 642-1687 or (706) 645-9291 and the PIN code is 7550420. In addition, a simultaneous Web cast, as well as an on-demand On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front replay, of the conference call will be available at the Company's Web site, http://www.scottishre.com/conferencecall. Scottish Re Group Limited is a global life reinsurance specialist and issuer of customized life-insurance based wealth management products for high net worth individuals and families. Scottish Re Group Limited has operating companies operating company A business that engages in transactions with outsiders. in Bermuda, Charlotte, North Carolina “Charlotte” redirects here. For other uses, see Charlotte (disambiguation). Charlotte is the largest city in the state of North Carolina and the 20th largest city in the United States. , Dublin Dublin, city, Republic of Ireland Dublin, Irish Baile Átha Cliath, county borough (1991 pop. 915,516), Leinster, capital of the Republic of Ireland, on Dublin Bay at the mouth of the Liffey River. , Ireland Ireland, Irish Eire (âr`ə) [to it are related the poetic Erin and perhaps the Latin Hibernia], island, 32,598 sq mi (84,429 sq km), second largest of the British Isles. , Grand Cayman Grand Cayman See Cayman Islands. and Windsor, England There are three places called Windsor in England:
annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. & Life Insurance Company (Cayman) Ltd. and Scottish Re (U.S.), Inc. which are rated A- (excellent) by A.M. Best, A (strong) by Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. , A3 (good) by Moody's Moody's Corporation (NYSE: MCO) is the holding company for Moody's Investors Service which performs financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized ratings scale. and A- (strong) by Standard & Poor's, Scottish Re Limited, which is rated A- (excellent) by A.M. Best, A (strong) by Fitch Ratings and A- (strong) by Standard & Poor's and Scottish Re Life Corporation Limited which is rated A-(excellent) by A.M. Best. Additional information about Scottish Re can be obtained from its Web site, http://www.scottishre.com. Certain statements included herein are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the federal securities laws. The management of Scottish Re Group Limited (the "Company") cautions that forward-looking statements are not guarantees, and that actual results could differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in the forward-looking statements. Important events that could cause the actual results of operations or financial condition of the Company to differ include, but are not necessarily limited to, the Company's ability to attract clients and generate business; the competitive environment; the Company's ability to underwrite To insure; to sell an issue of stocks and bonds or to guarantee the purchase of unsold stocks and bonds after a public issue. The word underwrite has two meanings. business; performance of outside service providers; mortality risk; surrender To give up, return, or yield. The word surrender presupposes the possession or ownership of the thing that is to be returned or given up. It indicates a transfer of title as well as possession, but it does not express or in any way suggest the transaction of a sale risk; investment risk (including asset value risk, reinvestment risk Reinvestment Risk The risk that future proceeds will have to be reinvested at a lower potential interest rate. Notes: This term is usually heard in the context of bonds. and disintermediation The elimination of the distributor and/or retailer (the middleman) when making a purchase. The term is used to refer to purchasing directly from a manufacturer's Web site, the benefits of which are convenience, fast turnaround time and sometimes lower prices. risk); the impact of unforeseen economic changes (such as changes in interest rates, currency exchange rate, inflation rates, recession and other external economic factors); the impact of terrorist activities on the economy, the insurance and related industries in general and the Company in particular; regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. changes (such as changes in U.S. tax law and insurance regulation which directly affect the competitive environment for the Company's products); rating agency policies and practices; and loss of key executives. Investors are also directed to consider the risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission.
Scottish Re Group Limited
Financial Highlights
(Stated in Thousands of United States Dollars, Except Per Share Data)
(Unaudited)
----------------------------------------------------------------------
Three months Three months Six months Six months
ended ended ended ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
-------------- ------------- ------------- -------------
Total revenue $503,778 $226,909 $1,061,911 $406,085
Net operating
earnings(a) 19,715 18,111 46,645 34,726
Net income 1,591 28,670 35,011 38,764
Net operating
earnings per
share
Basic $0.45 $0.51 $1.12 $0.98
Diluted $0.42 $0.49 $1.01 $0.93
Earnings per
share
Basic $0.04 $0.80 $0.84 $1.09
Diluted $0.03 $0.77 $0.76 $1.04
Dividends per
share $0.05 $0.05 $0.10 $0.10
Weighted
average
ordinary
shares
Outstanding
Basic 43,462,385 35,747,254 41,726,320 35,537,458
Diluted 47,136,889 37,328,448 46,179,275 37,279,282
(a) Excludes effect of realized gains and losses, change in
value of embedded derivatives and the amortization of related
deferred acquisition costs.
June 30, 2005 December 31, 2004
----------------- -----------------
Book value per share $23.74 $21.60
Fully diluted book value per share
- excluding other comprehensive
income and fair value of embedded
derivatives $20.13 $19.43
Scottish Re Group Limited
Consolidated Balance Sheets
(Stated in Thousands of United States Dollars)
June 30, 2005 December 31, 2004
----------------- -----------------
Assets
Fixed maturity investments $5,119,254 $3,392,463
Preferred stock 130,231 125,204
Cash and cash equivalents 320,531 794,639
Other investments 24,594 16,250
Funds withheld at interest 1,895,353 2,056,280
----------------- -----------------
Total investments 7,489,963 6,384,836
Accrued interest receivable 39,645 32,092
Net proceeds receivable on
preferred shares 120,786 -
Reinsurance balances and risk fees
receivable 443,589 470,817
Deferred acquisition costs 477,449 417,306
Amounts recoverable from
reinsurers 792,296 774,503
Present value of inforce business 58,752 62,164
Goodwill 34,125 34,125
Other assets 75,382 61,668
Segregated assets 799,329 783,573
----------------- -----------------
Total assets $10,331,316 $9,021,084
================= =================
Liabilities
Reserves for future policy
benefits $3,524,757 $3,370,562
Interest sensitive contract
liabilities 3,278,793 3,181,447
Collateral finance facilities 1,050,000 200,000
Accounts payable and other
liabilities 102,317 68,311
Reinsurance balances payable 100,060 116,589
7.00% Convertible junior
subordinated notes - 41,282
Long term debt 244,500 244,500
Segregated liabilities 799,329 783,573
----------------- -----------------
Total liabilities 9,099,756 8,006,264
----------------- -----------------
Minority Interest 9,920 9,697
Mezzanine Equity 142,753 142,449
Shareholders' equity
Ordinary shares, par value $0.01
per share:
Issued and fully paid:45,453,472
ordinary shares (2004 -
39,931,145) 454 399
Preferred shares, par value $0.01:
Issued and fully paid:
10,750,000 shares (2004-
5,750,000) 125,000 -
Additional paid- in capital 726,850 684,719
Accumulated other comprehensive
income 50,051 31,604
Retained earnings 176,532 145,952
----------------- -----------------
Total shareholders' equity 1,078,887 862,674
----------------- -----------------
Total liabilities and
shareholders' equity $10,331,316 $9,021,084
================= =================
Scottish Re Group Limited
Consolidated Statements of Income
(Stated in Thousand of United States Dollars)
Three months Three months Six months Six months
ended ended ended ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
------------- ------------- ------------- -------------
Revenues
Premiums earned $438,625 $155,980 $903,875 $289,327
Investment
income, net 83,554 54,817 164,033 104,919
Fee income 2,785 3,189 6,409 6,141
Realized gains
(losses) 934 (1,687) 4,229 (266)
Change in value
of embedded
derivatives,
net (22,120) 14,610 (16,635) 5,964
------------- ------------- ------------- -------------
Total
revenues 503,778 226,909 1,061,911 406,085
------------- ------------- ------------- -------------
Benefits and
expenses
Claims and
other policy
benefits 311,493 122,988 674,766 218,155
Interest
credited to
interest
sensitive
contract
liabilities 31,723 25,465 62,365 49,658
Acquisition
costs and
other
insurance
expenses, net 124,226 37,589 217,438 70,458
Operating
expenses 26,500 10,901 51,069 23,755
Collateral
finance
facilities
expense 11,821 - 19,241 -
Interest
expense 4,813 2,996 10,407 5,773
------------- ------------- ------------- -------------
Total
benefits
and
expenses 510,576 199,939 1,035,286 367,799
------------- ------------- ------------- -------------
Income (loss)
before income
taxes and
minority
interest (6,798) 26,970 26,625 38,286
Income tax
benefit 8,187 1,689 8,555 816
------------- ------------- ------------- -------------
Income before
minority
interest 1,389 28,659 35,180 39,102
Minority
interest 202 11 (169) (338)
------------- ------------- ------------- -------------
Net income $1,591 $28,670 $35,011 $38,764
============= ============= ============= =============
Scottish Re Group Limited
Supplemental Information - Net Operating Earnings
(Stated in Thousand of United States Dollars,
Except Per Share Amounts)
Three months Three months Six months Six months
ended ended ended ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
------------- ------------- ------------- -------------
Net operating
earnings
-------------
Net income $1,591 $28,670 $35,011 $38,764
Realized losses
(gains) (934) 1,687 (4,229) 266
Change in value
of embedded
derivatives,
net 22,120 (14,610) 16,635 (5,964)
Taxes on
realized
gains/losses
and change in
value of
embedded
derivatives (3,062) 2,364 (772) 1,660
------------- ------------- ------------- -------------
Net operating
earnings $19,715 $18,111 $46,645 $34,726
Net operating
earnings per
share
Basic $0.45 $0.51 $1.12 $0.98
Diluted $0.42 $0.49 $1.01 $0.93
============= ============= ============= =============
Weighted
average number
of shares
Outstanding
Basic 43,462,385 35,747,254 41,726,320 35,537,458
Diluted 47,136,889 37,328,448 46,179,275 37,279,282
Scottish Re Group Limited
Supplemental Information - Segment Operating Results
(Stated in Thousand of United States Dollars)
Life Reinsurance North America
Three months ended Six months ended
June 30 June 30
------------------------- -------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Premiums earned $410,687 $127,272 $848,560 $232,874
Investment income,
net 80,956 50,979 158,487 98,386
Fee income 2,007 2,248 4,907 4,350
Realized gains
(losses) 2,208 (1,552) 3,650 140
Change in value of
embedded
derivatives, net (22,120) 14,610 (16,635) 5,964
------------ ------------ ------------ ------------
Total revenues 473,738 193,557 998,969 341,714
------------ ------------ ------------ ------------
Claims and other
policy benefits 293,599 102,485 637,787 178,078
Interest credited
to interest
sensitive contract
liabilities 31,723 25,465 62,365 49,658
Acquisition costs
and other
insurance
expenses, net 119,737 35,701 208,793 65,236
Operating expenses 10,221 4,142 21,894 9,105
Collateral finance
facilities expense 10,448 - 16,633 -
Interest expense 2,657 939 5,365 1,625
------------ ------------ ------------ ------------
Total benefits and
expenses 468,385 168,732 952,837 303,702
------------ ------------ ------------ ------------
Income before
income taxes and
minority interest 5,353 24,825 46,132 38,012
Income tax benefit 8,465 1,734 8,678 922
------------ ------------ ------------ ------------
Income before
minority interest 13,818 26,559 54,810 38,934
Minority interest 202 11 (169) (338)
------------ ------------ ------------ ------------
Net income $14,020 $26,570 $54,641 $38,596
============ ============ ============ ============
Net operating
earnings
-------------
Net income $14,020 $26,570 $54,641 $38,596
Net realized losses
(gains) (2,208) 1,552 (3,650) (140)
Change in value of
embedded
derivatives, net 22,120 (14,610) 16,635 (5,964)
Taxes on above
items (3,204) 2,419 (958) 1,738
------------ ------------ ------------ ------------
Net operating
earnings $30,728 $15,931 $66,668 $34,230
============ ============ ============ ============
Scottish Re Group Limited
Supplemental Information - Segment Operating Results (continued)
(Stated in Thousand of United States Dollars)
Life Reinsurance International
Three months ended Six months ended
June 30 June 30
--------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ------------
Premiums earned $27,938 $28,708 $55,315 $56,453
Investment income, net 2,352 3,574 4,942 5,722
Realized gains (losses) 88 (189) 585 (340)
---------- ---------- ---------- ------------
Total revenues 30,378 32,093 60,842 61,835
---------- ---------- ---------- ------------
Claims and other policy
benefits 17,894 20,503 36,979 40,077
Acquisition costs and
other insurance
expenses, net 3,975 1,334 7,612 3,983
Operating expenses 7,285 3,757 13,134 8,166
---------- ---------- ---------- ------------
Total benefits and
expenses 29,154 25,594 57,725 52,226
---------- ---------- ---------- ------------
Income before income
taxes 1,224 6,499 3,117 9,609
Income tax expense (195) (1,085) (66) (1,123)
---------- ---------- ---------- ------------
Net income $1,029 $5,414 $3,051 $8,486
========== ========== ========== ============
Net operating earnings
----------------------
Net income $1,029 $5,414 $3,051 $8,486
Realized losses (gains) (88) 189 (585) 340
Taxes on realised losses
(gains) 9 (55) 174 (78)
---------- ---------- ---------- ------------
Net operating earnings $950 $5,548 $2,640 $8,748
========== ========== ========== ============
Scottish Re Group Limited
Supplemental Information - Segment Operating Results (continued)
(Stated in Thousand of United States Dollars)
Corporate & Other
Three months ended Six months ended
June 30 June 30
--------------------- ----------------------
2005 2004 2005 2004
---------- ---------- ---------- -----------
Investment income, net $246 $264 $604 $811
Fee income 778 941 1,502 1,791
Realized gains (losses) (1,362) 54 (6) (66)
---------- ---------- ---------- -----------
Total revenues (338) 1,259 2,100 2,536
---------- ---------- ---------- -----------
Acquisition costs and
other insurance expenses,
net 514 554 1,033 1,239
Operating expenses 8,994 3,002 16,041 6,484
Collateral finance
facilities expense 1,373 - 2,608 -
Interest expense 2,156 2,057 5,042 4,148
---------- ---------- ---------- -----------
Total benefits and
expenses 13,037 5,613 24,724 11,871
---------- ---------- ---------- -----------
Loss before income taxes (13,375) (4,354) (22,624) (9,335)
Income tax benefit
(expense) (83) 1,040 (57) 1,017
Loss $(13,458) $(3,314) $(22,681) $(8,318)
========== ========== ========== ===========
Net operating loss
------------------
Loss $(13,458) $(3,314) $(22,681) $(8,318)
Realized losses (gains) 1,362 (54) 6 66
Taxes on realised losses
(gains) 133 - 12 -
---------- ---------- ---------- -----------
Net operating loss $(11,963) $(3,368) $(22,663) $(8,252)
========== ========== ========== ===========
Scottish Re Group Limited
Supplemental Information - Business Acquired from ING
(Stated in Thousand of United States Dollars)
This supplemental information is in respect of the business
acquired from ING. This information also includes premiums earned,
claims and other policy benefits and acquisition costs and other
insurance expenses related to 2005 new business on treaties that
remained open to new business after the date of acquisition. Since
this block has been combined with the Company's existing North America
Traditional Solutions business, shared operating expenses are not
allocated directly to the results of the block.
Three months Six months
ended ended
June 30, 2005 June 30, 2005
--------------- ---------------
Premiums earned (1) $278,776 $567,007
Investment income, net 18,584 36,093
Realized gains 394 2,294
Change in value of embedded
derivatives, net (17,616) (13,231)
--------------- ---------------
Total revenues 280,138 592,163
--------------- ---------------
Claims and other policy benefits (1) 183,056 412,544
Acquisition costs and other insurance
expenses, net (1) 77,895 136,379
Operating expenses(2) 4,538 9,690
--------------- ---------------
Total benefits and expenses 265,489 558,613
--------------- ---------------
Income before income taxes and minority
interest $14,649 $33,550
=============== ===============
(1) Includes premiums earned in connection with new business
written in 2005 on treaties that were still open to new business
after the date of acquisition.
(2) Operating expenses include only direct expenses and do not
include an allocation of shared expenses from the Company's North
American operation.
Scottish Re Group Limited
Supplemental Information - Book Value Per Ordinary Share
and Fully Diluted Book Value Per Ordinary Share
(Stated in Thousand of United States Dollars,
Except Per Share Amounts)
Fully diluted book value per ordinary share is a non-GAAP measure,
based on total shareholder's equity plus the assumed proceeds from the
exercise of outstanding options, warrants and other convertible
securities, divided by the sum of shares, options and warrants
outstanding, and the number of shares required upon the conversion of
convertible securities. The Company believes that fully diluted book
value per ordinary share more accurately reflects the book value that
is attributable to an ordinary share.
June 30, 2005 December 31, 2004
----------------- ------------------
Shareholders' equity - end of
period $1,078,887 $862,674
Other comprehensive income (50,051) (31,604)
Fair value of embedded
derivative, net 21,798 5,162
Preferred shares (125,000) -
Net proceed from assumed:
Conversion of options 46,090 37,085
Conversion warrants 39,750 39,782
Conversion of Mezzanine Equity 143,750 143,750
Conversion of 7% Convertible
notes - 41,282
----------------- ------------------
Numerator for diluted book value
per share calculation $1,155,224 $1,098,131
================= ==================
Ordinary shares outstanding-end
of period 45,453,472 39,931,145
Potential shares issued from
assumed:
Exercise of options and
restricted stock units 3,199,936 2,491,236
Conversion of warrants 2,650,000 5,856,431
Conversion of Mezzanine Equity 6,099,025 6,099,025
Conversion of 7% Convertible
notes - 2,130,709
----------------- ------------------
Denominator for diluted book
value per share calculation 57,402,433 56,508,546
================= ==================
Book value per ordinary share $23.74 $21.60
Fully diluted book value per
ordinary share (excluding other
comprehensive income and the
fair value of embedded
derivatives) $20.13 $19.43
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