Scottish Re Group Limited Announces Operating Results for the First Quarter Ended March 31, 2006.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 available to ordinary shareholders for the quarter ended March 31, 2006 was $11.6 million, or $0.20 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 $33.4 million, or $0.74 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 available to ordinary shareholders were $14.3 million, or $0.25 per diluted ordinary share for the quarter ended March 31, 2006 as compared to $26.9 million or $0.60 per diluted ordinary share for the prior year period. "Net operating earnings available to ordinary shareholders" is a non-GAAP measurement. The Company determines net operating earnings available to ordinary shareholders by adjusting net income available to ordinary shareholders 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 available to ordinary shareholders 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. operation 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 available to ordinary shareholders 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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Reconciliations to net income available to ordinary shareholders are provided in the following tables. The earnings contribution of the Company's International segment was adversely impacted by adverse mortality and morbidity morbidity /mor·bid·i·ty/ (mor-bid´it-e) 1. a diseased condition or state. 2. the incidence or prevalence of a disease or of all diseases in a population. mor·bid·i·ty n. experience of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $4 million on a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta basis. This was driven by the occurrence of ten large claims in the quarter, as compared to the typical expectation of one per month. The segment also was negatively impacted by approximately $7 million of late reported claims by several ceding cede tr.v. ced·ed, ced·ing, cedes 1. To surrender possession of, especially by treaty. See Synonyms at relinquish. 2. companies (some in excess of two years old) and a $4 million provision resulting from a review of 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. recoveries on certain large claims. A review of the potential for similar issues to occur in the future was undertaken and additional reserves were established and included in these adjustments. International Segment Transformation Prior to 2005, the Company's International Segment specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. in niche markets A niche market also known as a target market is a focused, targetable portion (subset) of a market sector. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. in developed countries and broader life insurance markets in the developing world and focused on the reinsurance of short term group life and personal accident policies. For the past 18 months, the Company has been actively transforming its international business segment. This transformation plan is comprised of several actions: (1) Overhauling legacy business practices and installing robust systems and internal controls; (2) Significantly upgrading the calibre calibre see caliber. of the management team and staff; (3) Exiting geographic markets and running-off business with risk-adjusted returns Risk-Adjusted Return A measure of how much risk a fund or portfolio takes on to earn its returns, usually expressed as a number or a rating. Notes: This is often represented by the Sharpe Ratio. The more return per unit of risk, the better. that are below the Company's requirements and (4) Actively developing a substantial presence in the traditional mortality and annuity annuity: see insurance. 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. business in the United Kingdom and 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. , as well as, prudently pru·dent adj. 1. Wise in handling practical matters; exercising good judgment or common sense. 2. Careful in regard to one's own interests; provident. 3. Careful about one's conduct; circumspect. growing selected key regional markets, such as Asia. UK New Business Success "We are focused on capitalizing on the success we are enjoying in our UK business and regional expansion," Mr. Willkomm said. "We have written five protection treaties that are expected to generate approximately $10 million of premium during the course of 2006 and $50 million in 2007. In addition, we closed a $600 million fixed annuity Fixed Annuity An insurance contract in which the insurance company makes fixed dollar payments to the annuitant for the term of the contract, usually until the annuitant dies. The insurance company guarantees both earnings and principal. transaction in the UK in early April that will generate attractive 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. returns on capital." Total revenues for the quarter increased to $578.3 million from $556.6 million for the prior year period, an increase of 3.9%. 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 value of the embedded derivatives, total revenues for the quarter increased to $581.8 million from $547.8 million for the prior year period, an increase of 6.2%. Total benefits and expenses increased to $571.8 million for the quarter from $523.1 million for the prior year period, an increase of 9.3%. The increases in revenues and expenses were principally driven by growth in the Company's reinsurance business 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. . US Market Share Leadership Continues In 2005, Scottish Re originated $131 billion of traditional life reinsurance in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . As a result, the Company was the number two life reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. with a 15.5% recurring new business market share according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the annual Society of Actuaries Mission Statement The Society of Actuaries is a professional organization for actuaries based in North America. Its headquarters are located in Schaumburg, Illinois. survey. In the first quarter, the Company originated $15.5 billion of new traditional life reinsurance business, which was in line with production expectations. In the first quarter, Scottish Re's North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Segment's pre-tax operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was slightly better than expected. On an assumed basis, actual-to-expected mortality experience in the United States was in line with expectations. However, net claims expense was approximately $5 million greater than expected due to a lower level of claim recoveries from retrocessionaires in the quarter. During the quarter, fewer claims were reported in excess of the Company's per life retention that would have benefited from retrocession. Consolidated 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. in Line 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 to total revenue excluding realized gains and losses and the change in value of embedded derivatives) for the last twelve months ended March 31, 2006 was 5.2%, as compared to an operating expense ratio of 5.0% for the year ended December December: see month. 31, 2005, resulting principally in lower operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. during the first quarter 2006. On a absolute dollar basis, 2006 operating expenses are on track to be level with 2005 reflecting the increased scale in our operations in North America and the successful integration of the ING Re acquisition. The Company's effective tax rate was higher in the first quarter than prior quarters principally due to the operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. incurred in the International segment. The Company's total assets were $12.3 billion as of March 31, 2006. 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 $6.8 billion, and had an average quality rating of "AA", an effective duration of 3.0 years and a weighted average book yield of 5.1%. This compares with a portfolio balance of $6.7 billion, an average quality rating of "AA", effective duration of 2.9 years and an average book yield of 4.9% as of December 31, 2005. Funds withheld at interest, totaling $2.6 billion, had an average quality rating of "A", an effective duration of 4.7 years and a weighted average book yield of 5.7% at March 31, 2006. This compares with a total of $2.6 billion with an average quality rating of "A+", an effective duration of 5.1 years and an average book yield of 5.6% at December 31, 2005. The Company's book value per share was $20.80 at March 31, 2006 as compared to $21.48 per share at December 31, 2005. Fully converted book value per share was $21.13 at March 31, 2006 as compared to $21.17 at December 31, 2005. 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 shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. - measured by dividing net operating earnings available to ordinary shareholders by average shareholders' equity excluding the effect of other comprehensive income and the change in value of embedded derivatives - was 11.5%. Securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. Breakthroughs On May 2, 2006, Scottish Re completed an offering by Ballantyne Ballantyne may refer to: Places
On May 4, 2006, the Company completed a $155 million mortality catastrophe bond catastrophe bond A debt security with a payoff tied to the relative severity of a natural disaster such as a hurricane or earthquake. Bondholders are paid with insurance premiums but may have to accept reduced principal repayment in the event the specified offering by Tartan Tartan, in the Bible Tartan (tär`tăn), in the Bible, official title of two Assyrians sent to Hezekiah by Sennacherib and Sargon. tartan, pattern tartan: see plaid. Capital Limited. Tartan will pay the Company up to $155 million in the event of severe population mortality. The Company's earnings conference call will be held at 11:00 am (EST EST electroshock therapy. EST abbr. electroshock therapy ) on Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant , May 5, 2006. The dial-in number is (877) 502-2902 or (706) 679-5950 and the conference ID is 7586906. A replay of the call will be available beginning at 3:00 pm on Friday, May 5, 2006 and running through Friday, May 19, 2006. The dial-in number for the replay is (800) 642-1687 or (706) 645-9291 and the conference ID is 7586906. 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, www.scottishre.com. About Scottish Re Scottish Re Group Limited is a global life reinsurance specialist. Scottish Re has operating businesses in Bermuda, Grand Cayman Grand Cayman See Cayman Islands. , Guernsey Guernsey (gûrn`zē), island, 25 sq mi (65 sq km), in the English Channel, second largest of the Channel Islands. Guernsey bailiwick (2005 est. pop. 65,000) includes Alderney, Sark, Herm, Brechou, Jethou, and smaller islands. , Ireland, Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). , the United Kingdom and the United States. Its flagship This article is about the lead ship, store, or product of a group. For other uses, see Flagship (disambiguation). A flagship is the ship used by the commanding officer of a group of naval ships. operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. include Scottish Annuity & 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 Company. Scottish Re Capital Markets, Inc., a member of Scottish Re Group Limited, is a registered broker dealer that specializes in securitization of life insurance assets and liabilities. Additional information about Scottish Re Group Limited can be obtained from its Web site, 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 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 Share Data)
(Unaudited)
Three months Three months
ended ended
March 31, 2006 March 31, 2005
--------------- ---------------
Total revenues $578,321 $556,562
Net operating earnings available to
ordinary shareholders(1) 14,286 26,931
Net income 13,849 33,420
Net income available to ordinary
shareholders 11,583 33,420
Net operating earnings per ordinary
share
Basic $0.27 $0.67
Diluted $0.25 $0.60
Earnings per ordinary share
Basic $0.22 $0.84
Diluted $0.20 $0.74
Dividends per ordinary share $0.05 $0.05
Weighted average ordinary shares
Outstanding
Basic 53,434,484 39,970,965
Diluted 56,532,914 45,192,171
(1) Excludes the effects of net realized capital gains and losses and
the change in value of embedded derivatives, as adjusted for the
related effects upon the amortization of deferred acquisition
costs, and taxes related to these items as well as dividends on
the perpetual preferred shares.
March 31, December 31,
--------- ------------
2006 2005
---- ----
Book value per ordinary share $20.80 $21.48
Basic book value per ordinary
share - excluding other
comprehensive income and value
of embedded derivatives $21.89 $21.89
Fully diluted book value per
ordinary share - excluding
other comprehensive income and
value of embedded derivatives $21.13 $21.17
Scottish Re Group Limited
Consolidated Balance Sheets
(Stated in Thousands of United States Dollars, Except Share Data)
March 31, 2006 December 31, 2005
--------------- -----------------
(Unaudited)
Assets
Fixed maturity investments $6,066,176 $5,292,595
Preferred stock 131,722 133,804
Cash and cash equivalents 690,076 1,420,205
Other investments 64,141 54,619
Funds withheld at interest 2,610,195 2,597,416
--------------- -----------------
Total investments 9,562,310 9,498,639
Accrued interest receivable 45,371 44,012
Reinsurance balances and risk fees
receivable 381,095 325,372
Deferred acquisition costs 620,385 594,583
Amounts recoverable from reinsurers 605,241 551,288
Present value of in-force business 53,826 54,743
Goodwill 34,125 34,125
Other assets 94,719 87,198
Deferred tax benefit 79,435 55,453
Segregated assets 780,132 760,707
--------------- -----------------
Total assets $12,256,639 $12,006,120
=============== =================
Liabilities
Reserves for future policy benefits $3,539,016 $3,477,222
Interest sensitive contract
liabilities 3,990,836 3,907,573
Collateral finance facilities 1,985,681 1,985,681
Accounts payable and other
liabilities 70,750 83,130
Reinsurance balances payable 247,724 114,078
Current income tax payable 4,481 9,155
Long term debt 244,500 244,500
Segregated liabilities 780,132 760,707
--------------- -----------------
Total liabilities 10,863,120 10,582,046
--------------- -----------------
Minority interest 9,334 9,305
Mezzanine equity 143,207 143,057
Shareholders' equity
Ordinary shares, par value $0.01 per
share:
Issued: 53,655,856 shares (2005 -
53,391,939) 537 534
Preferred shares, par value $0.01:
Issued: 5,000,000 shares (2005 -
5,000,000) 125,000 125,000
Additional paid- in capital 899,515 893,767
Accumulated other comprehensive
income (55,386) (9,991)
Retained earnings 271,312 262,402
--------------- -----------------
Total shareholders' equity 1,240,978 1,271,712
--------------- -----------------
Total liabilities, minority
interest, mezzanine equity and
shareholders' equity $12,256,639 $12,006,120
=============== =================
Scottish Re Group Limited
Consolidated Statements of Income
(Stated in Thousands of United States Dollars)
(Unaudited)
Three months Three months
ended ended
March 31, 2006 March 31, 2005
-------------------------------
Revenues
Premiums earned, net $449,021 $463,680
Investment income, net 129,022 80,479
Fee income 3,733 3,624
Realized gains (losses) (13,601) 3,294
Change in value of embedded
derivatives, net 10,146 5,485
--------------- ---------------
Total revenues 578,321 556,562
--------------- ---------------
Benefits and expenses
Claims and other policy benefits 374,463 363,272
Interest credited to interest sensitive
contract liabilities 42,701 30,642
Acquisition costs and other insurance
expenses, net 87,531 91,642
Operating expenses 31,092 24,569
Collateral finance facilities expense 31,087 7,420
Interest expense 4,893 5,594
--------------- ---------------
Total benefits and expenses 571,767 523,139
--------------- ---------------
Income before income taxes and minority
interest 6,554 33,423
Income tax benefit 7,457 368
--------------- ---------------
Income before minority interest 14,011 33,791
Minority interest (162) (371)
--------------- ---------------
Net income $13,849 $33,420
Dividend declared on non-cumulative
perpetual preferred shares (2,266) -
--------------- ---------------
Net income available to ordinary
shareholders $11,583 $33,420
=============== ===============
Scottish Re Group Limited
Supplemental Information - Net Operating Earnings
(Stated in Thousands of United States Dollars, Except Share Data)
(Unaudited)
Three months Three months
ended ended
March 31, 2006 March 31, 2005
-----------------------------
Net operating earnings available to ordinary shareholders
---------------------------------------------------------
Net income available to ordinary
shareholders $11,583 $33,420
Realized losses (gains) 13,601 (3,294)
Change in value of embedded derivatives,
net (10,146) (5,485)
Taxes on realized gains/losses and change
in value of embedded derivatives (752) 2,290
-------------- --------------
Net operating earnings available to
ordinary shareholders $14,286 $26,931
============== ==============
Net operating earnings per share
available to ordinary shareholders
Basic $0.27 $0.67
Diluted $0.25 $0.60
============== ==============
Weighted average number of ordinary
shares outstanding
Basic 53,434,484 39,970,965
Diluted 56,532,914 45,192,171
Scottish Re Group Limited
Supplemental Information - Segment Operating Results
(Stated in Thousands of United States Dollars)
(Unaudited)
Life Reinsurance North America
Three months ended
March 31
-----------------------
2006 2005
----------- -----------
Premiums earned, net $428,918 $437,095
Investment income, net 123,941 77,531
Fee income 3,017 2,900
Realized gains (losses) (13,919) 1,441
Change in value of embedded derivatives, net 10,146 5,485
----------- -----------
Total revenues 552,103 524,452
----------- -----------
Claims and other policy benefits 347,280 344,188
Interest credited to interest sensitive
contract liabilities 42,701 30,642
Acquisition costs and other insurance expenses,
net 84,408 88,277
Operating expenses 14,592 11,672
Collateral finance facilities expense 30,543 6,185
Interest expense 2,562 2,708
----------- -----------
Total benefits and expenses 522,086 483,672
----------- -----------
Income before income taxes and minority
interest $30,017 $40,780
=========== ===========
Pre tax operating earnings
--------------------------
Pre-tax income $30,017 $40,780
Realized losses (gains) 13,919 (1,441)
Change in value of embedded derivatives, net (10,146) (5,485)
----------- -----------
Pre-tax operating earnings $33,790 $33,854
=========== ===========
Scottish Re Group Limited
Supplemental Information - Segment Operating Results (continued)
(Stated in Thousands of United States Dollars)
(Unaudited)
Life Reinsurance International
Three months ended
March 31
-----------------------
2006 2005
----------- -----------
Premiums earned, net $20,103 $26,585
Investment income, net 2,989 2,590
Realized gains (losses) (1,138) 497
----------- -----------
Total revenues 21,954 29,672
----------- -----------
Claims and other policy benefits 27,183 19,084
Acquisition costs and other insurance expenses,
net 2,817 2,846
Operating expenses 5,777 5,849
Total benefits and expenses 35,777 27,779
----------- -----------
Income before income taxes $(13,823) $1,893
=========== ===========
Pre-tax operating earnings
--------------------------
Pre-tax income $(13,823) $1,893
Realized losses (gains) 1,138 (497)
----------- -----------
Pre-tax operating earnings $(12,685) $1,396
=========== ===========
Scottish Re Group Limited
Supplemental Information - Segment Operating Results (continued)
(Stated in Thousands of United States Dollars)
(Unaudited)
Corporate & Other
Three months ended
March 31
------------------------
2006 2005
------------ -----------
Investment income, net $2,092 $358
Fee income 716 724
Realized gains 1,456 1,356
------------ -----------
Total revenues 4,264 2,438
------------ -----------
Acquisition costs and other insurance
expenses, net 306 519
Operating expenses 10,723 7,048
Collateral finance facilities expense 544 1,235
Interest expense 2,331 2,886
------------ -----------
Total benefits and expenses 13,904 11,688
------------ -----------
Loss before income taxes $(9,640) $(9,250)
============ ===========
Pre-tax operating loss
----------------------
Pre-tax loss $(9,640) $(9,250)
Realized losses (gains) (1,456) (1,356)
------------ -----------
Pre-tax operating loss $(11,096) $(10,606)
============ ===========
Scottish Re Group Limited
Supplemental Information - Book Value Per Ordinary Share and
Fully Converted Book Value Per Ordinary Share
(Stated in Thousands of United States Dollars, Except Share Amounts)
(Unaudited)
Fully converted book value per ordinary share is a non-GAAP measure,
based on total shareholders' 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.
March 31, 2006 December 31, 2005
--------------- -----------------
Shareholders' equity - end of period $1,240,978 $1,271,712
Other comprehensive income 55,386 9,991
Fair value of embedded derivative,
net 2,984 11,810
Preferred shares (125,000) (125,000)
Net proceeds from assumed:
Conversion of options 45,072 48,374
Conversion of warrants 39,750 39,750
Conversion of mezzanine equity 143,750 143,750
--------------- -----------------
Numerator for diluted book value per
share calculation $1,402,920 $1,400,387
=============== =================
Ordinary shares outstanding-end of
period 53,655,856 53,391,939
Potential shares issued from assumed:
Exercise of options and
restricted stock units 3,320,020 3,390,936
Conversion of warrants 2,650,000 2,650,000
Conversion of mezzanine equity 6,099,025 6,099,025
Conversion of 4.5% senior convertible
notes 661,870 612,780
--------------- -----------------
Denominator for diluted book value
per share calculation 66,386,771 66,144,680
=============== =================
Book value per ordinary share $20.80 $21.48
Basic book value per ordinary share -
excluding other comprehensive income
and value of embedded derivatives $21.89 $21.89
Fully diluted book value per ordinary
share (excluding other comprehensive
income and the value of embedded
derivatives) $21.13 $21.17
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