Scottish Re Group Limited Announces Operating Results for the Second Quarter Ended June 30, 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 the net loss available to ordinary shareholders for the three months ended June June: see month. 30, 2006 was $123.9 million, or a loss of $2.31 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 net income available to ordinary shareholders of $1.6 million, or $0.03 per diluted ordinary share for the prior year period. The net loss available to ordinary shareholders for the six months ended June 30, 2006 was $112.3 million, or a loss of $2.10 per diluted ordinary share, as compared to net income available to ordinary shareholders of $35.0 million, or $0.76 per diluted ordinary share for the prior year period. The net operating loss 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. available to ordinary shareholders was $130.3 million, or a loss of $2.43 per diluted ordinary share for the three months ended June 30, 2006 as compared to 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 of $19.7 million or $0.42 per diluted ordinary share for the prior year period. The net operating loss available to ordinary shareholders was $116.0 million, or a loss of $2.17 per diluted ordinary share for the six months ended June 30, 2006 as compared to net operating earnings of $46.6 million or $1.01 per diluted ordinary share for the prior year period. "The results for the quarter are a sharp departure from our original projections and estimates provided to our stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. " said Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. Goldean, Interim Chief Executive Officer. "While we are very disappointed with the results, we believe that the core fundamentals of the business are sound. In fact, our mortality experience for the quarter was in line with expectations." The net operating loss for the second quarter was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the following factors: i. Tax expense of $89.0 million principally related to a $112.4 million valuation allowance established on deferred tax assets. The valuation allowance resulted from revised statutory and tax projections of the Company combined with a reassessment Reassessment The process of re-determining the value of property or land for tax purposes. Notes: Property is usually reassessed on an annual basis. You may request a "reassessment" if you disagree with your assessment. of certain tax planning Tax planning Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer. strategies; ii. An approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. $8.0 million reduction in premium accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. 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. resulting from a revision (programming) revision - A release of a piece of software which is not a major release or a bugfix, but only introduces small changes or new features. of estimates relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc prior periods; iii. A deferred acquisition cost adjustment of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $13.0 million due to higher than expected lapses on certain 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. treaties; iv. External 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. and reserve adjustments of approximately $21.0 million due to revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. in estimates resulting from improved data and systems which administer To give an oath, as to administer the oath of office to the president at the inauguration. To direct the transactions of business or government. Immigration laws are administered largely by the Immigration and Naturalization Service. retrocession accounts; and v. Severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and retirement and other non-recurring 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. of approximately $9.0 million. "It is important, however, to keep the loss in perspective and to note that Scottish Re continues to have sufficient sources of liquidity, collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although and capital to meet the near-term near-term adj. Of, for, or involving a short period of time in the near future. needs of the business." said Dean Miller, Chief Financial Officer. "Of particular note is that all 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. remain capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. well in excess of their minimum required levels as prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). by their respective Regulators. We look forward to sharing additional information at our scheduled earnings call and additionally, have posted to our web-site, www.scottishre.com, a Financial Supplement to add further clarification Clarification The removal of small amounts of fine, particulate solids from liquids. The purpose is almost invariably to improve the quality of the liquid, and the removed solids often are discarded. to our financial results for the quarter." Total revenues for the three months ended June 30, 2006 increased to $593.6 million from $502.0 million for the prior year period, an increase of 18%. 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 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. , total revenues for the three months ended June 30, 2006 increased to $597.6 million from $523.2 million for the prior year period, an increase of 14%. Total revenues for the six months ended June 30, 2006 increased to $1,171.9 million from $1,058.6 million for the prior year period, an increase of 11%. Excluding realized gains and losses and the change in value of the embedded derivatives, total revenues for the six months ended June 30, 2006 increased to $1,179.3 million from $1,071.0 million for the prior year period, an increase of 10%. Premiums earned in the three months ended June 30, 2006 were negatively impacted by revisions to previous premium accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. estimates of approximately $8 million (pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ) and adjustments related to retro [Latin, Back; backward; behind.] A prefix used to designate a prior condition or time. premiums of approximately $13 million (pre-tax). The investment portfolio, which increased by $1.74 billion from the closing of the Ballantyne Ballantyne may refer to: Places
Total benefits and expenses increased to $626.0 million for the three months ended June 30, 2006 from $508.8 million for the prior year period, an increase of 23%. Total benefits and expenses increased to $1,197.8 million for the six months ended June 30, 2006 from $1,032.0 million for the prior year period, an increase of 16%. Total benefits and expenses exceeded estimates due to refinements in our external retrocession reserves of approximately $7 million (pre-tax). In addition, an adjustment of approximately $13 million (pre-tax) to write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. deferred acquisition costs was made to reflect the Company's current best estimate of lapses on certain fixed annuity treaties. 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 six months ended June 30, 2006 was 6.0%, as compared to an operating expense ratio of 5.0% for the year ended December December: see month. 31, 2005. Operating expenses for the quarter were negatively impacted by severance and retirement expenses of approximately $5.0 million, expenses related to the International segment expansion and various professional fees that on a combined basis amounted to an additional $3.0 million. For the three months ended June 30, 2006, the Company had a pre-tax loss of $32.4 million before Minority Interest and recorded an initial tax benefit of $23.4 million on those losses. In addition, the Company recorded a $112.4 million valuation allowance resulting in a total tax charge of $89.0 million for the period. The Company's book value per share was $17.73 at June 30, 2006 as compared to $21.48 per share at December 31, 2005. Fully converted book value per share was $19.27 at June 30, 2006 as compared to $21.17 at December 31, 2005. The Company's earnings conference call will be held at 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 , August 4, 2006. The dial-in number is 877-502-2902 or 706-679-5950 and the conference ID is 2906522. A replay of the call will be available beginning at 12:30 pm on Friday, August 4, 2006 and running through Friday, August 18, 2006. The dial-in number for the replay is 800-642-1687 or 706-645-9291 and the conference ID is 2906522. 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 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. 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 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. , 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 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. . 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 include Scottish 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. & Life Insurance Company (Cayman) Ltd. and Scottish Re (U.S.), Inc. Scottish Re Capital Markets, Inc., a member of Scottish Re Group Limited, is a registered broker dealer that specializes in 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. 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. (Tables to follow)
Scottish Re Group Limited
Financial Highlights
(Stated in Thousands of United States Dollars, Except Share Data)
(Unaudited)
Three months ended Six months ended
June 30 June 30
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Total revenue $593,626 $502,046 $1,171,947 $1,058,609
Net operating earnings
(loss) available to
ordinary
shareholders* (130,313) 19,715 (116,038) 46,645
Net income (loss) (121,590) 1,591 (107,741) 35,011
Net income (loss)
available to ordinary
shareholders (123,927) 1,591 (112,344) 35,011
Net operating earnings
(loss) per ordinary
share
Basic $(2.43) $0.45 $(2.17) $1.12
Diluted $(2.43) $0.42 $(2.17) $1.01
Earnings (loss) per
ordinary share
Basic $(2.31) $0.04 $(2.10) $0.84
Diluted $(2.31) $0.03 $(2.10) $0.76
Dividends declared per
ordinary share $0.00 $0.05 $0.05 $0.10
Weighted average
ordinary shares
Outstanding
Basic 53,720,242 43,462,385 53,578,152 41,726,320
Diluted 53,720,242 47,136,889 53,578,152 46,179,275
*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 and imputed dividend on prepaid variable share
forward contract.
June 30, December,
2006 2005
-----------------------------------------------
Book value per
ordinary share $17.73 $21.48
Basic book value per
ordinary share -
excluding other
comprehensive income
and value of
embedded derivatives $19.45 $ 21.89
Fully diluted book
value per ordinary
share - excluding
other comprehensive
income and value of
embedded derivatives $19.27 $21.17
Scottish Re Group Limited
Consolidated Balance Sheets
(Stated in Thousands of United States Dollars, Except Share Data)
June 30, December 31,
2006 2005
------------ --------------
(Unaudited)
Assets
Fixed maturity investments $8,126,980 $5,292,595
Preferred stock 128,137 133,804
Cash and cash equivalents 1,563,341 1,420,205
Other investments 64,701 54,619
Funds withheld at interest 2,175,141 2,597,416
------------ --------------
Total investments 12,058,300 9,498,639
Accrued interest receivable 71,411 44,012
Reinsurance balances and risk fees
receivable 306,454 325,372
Deferred acquisition costs 643,211 594,583
Amounts recoverable from reinsurers 532,000 551,288
Present value of in-force business 52,924 54,743
Goodwill 34,125 34,125
Other assets 124,349 87,198
Deferred tax benefit 5,901 55,453
Segregated assets 776,048 760,707
------------ --------------
Total assets $14,604,723 $12,006,120
============ ==============
Liabilities
Reserves for future policy benefits $4,101,799 $3,477,222
Interest sensitive contract liabilities 4,089,373 3,907,573
Collateral finance facilities 3,725,161 1,985,681
Loans payable 64,856 -
Accounts payable and other liabilities 71,528 83,130
Reinsurance balances payable 187,438 114,078
Current income tax payable 3,487 9,155
Long term debt 244,500 244,500
Segregated liabilities 776,048 760,707
------------ --------------
Total liabilities 13,264,190 10,582,046
------------ --------------
Minority interest 9,284 9,305
Mezzanine equity 143,359 143,057
Shareholders' equity
Ordinary shares, par value $0.01 per
share:
Issued: 53,745,156 shares (2005 -
53,391,939) 537 534
Preferred shares, par value $0.01 per
share:
Issued: 5,000,000 shares (2005 -
5,000,000) 125,000 125,000
Additional paid- in capital 903,422 893,767
Prepaid variable share forward contract 110,031 -
Accumulated other comprehensive income (95,799) (9,991)
Retained earnings 144,699 262,402
------------ --------------
Total shareholders' equity 1,187,890 1,271,712
------------ --------------
Total liabilities, minority interest,
mezzanine equity and shareholders'
equity $14,604,723 $12,006,120
============ ==============
Scottish Re Group Limited
Consolidated Statements of Income (Loss)
(Stated in Thousands of United States Dollars)
(Unaudited)
Three months ended Six months ended
June 30 June 30
-------------------- ---------------------
2006 2005 2006 2005
---------- --------- ---------- ----------
Revenues
Premiums earned $444,942 $436,893 $893,963 $900,573
Investment income, net 147,977 83,554 276,999 164,033
Fee income 4,639 2,785 8,372 6,409
Realized gains (losses) (11,298) 934 (24,899) 4,229
Change in value of embedded
derivatives, net 7,366 (22,120) 17,512 (16,635)
---------- --------- ---------- ----------
Total revenues 593,626 502,046 1,171,947 1,058,609
---------- --------- ---------- ----------
Benefits and expenses
Claims and other policy
benefits 372,101 311,493 746,564 674,766
Interest credited to
interest sensitive
contract liabilities 55,399 31,723 98,100 62,365
Acquisition costs and other
insurance expenses, net 104,872 122,494 192,403 214,136
Operating expenses 39,365 26,500 70,457 51,069
Collateral finance
facilities expense 47,236 11,821 78,323 19,241
Interest expense 7,066 4,813 11,959 10,407
---------- --------- ---------- ----------
Total benefits and
expenses 626,039 508,844 1,197,806 1,031,984
---------- --------- ---------- ----------
Income (loss) before income
taxes and minority
interest (32,413) (6,798) (25,859) 26,625
Income tax benefit
(expense) (89,043) 8,187 (81,586) 8,555
---------- --------- ---------- ----------
Income (loss) before
minority interest (121,456) 1,389 (107,445) 35,180
Minority interest (134) 202 (296) (169)
---------- --------- ---------- ----------
Net income (loss) (121,590) 1,591 (107,741) 35,011
Dividends declared on non-
cumulative preferred
shares (2,265) - (4,531) -
Imputed dividend on prepaid
variable share forward
contract (72) - (72) -
---------- --------- ---------- ----------
Net income (loss) available
to ordinary shareholders $(123,927) $1,591 $(112,344) $35,011
========== ========= ========== ==========
Scottish Re Group Limited
Supplemental Information - Net Operating Earnings (Loss)
(Stated in Thousands of United States Dollars, Except Share Data)
(Unaudited)
Three months ended Six months ended
June 30 June 30
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Net operating earnings
(loss) available to
ordinary shareholders
----------------------
Net income (loss)
available to ordinary
shareholders $(123,927) $1,591 $(112,344) $35,011
Realized losses
(gains) 11,298 (934) 24,899 (4,229)
Change in value of
embedded derivatives,
net (7,366) 22,120 (17,512) 16,635
Taxes on realized
gains (losses) and
change in value of
embedded derivatives (10,318) (3,062) (11,081) (772)
----------- ----------- ----------- -----------
Net operating earnings
(loss) available to
ordinary shareholders $(130,313) $19,715 $(116,038) $46,645
=========== =========== =========== ===========
Net operating earnings
(loss) per share
available to ordinary
shareholders
Basic $(2.43) $0.45 $(2.17) $1.12
Diluted $(2.43) $0.42 $(2.17) $1.01
=========== =========== =========== ===========
Weighted average
number of ordinary
shares outstanding
Basic 53,720,242 43,462,385 53,578,152 41,726,320
Diluted 53,720,242 47,136,889 53,578,152 46,179,275
"Net operating earnings (loss) available to ordinary shareholders" is
a non-GAAP measurement. The Company determines net operating earnings
(loss) available to ordinary shareholders by adjusting net income
(loss) available to ordinary shareholders by 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. While these items may be significant
components in understanding and assessing the Company's consolidated
financial performance, the Company believes that the presentation of
net operating earnings (loss) available to ordinary shareholders
enhances the understanding of its results of operations by
highlighting earnings attributable to the normal, recurring operation
of its reinsurance business. However, net operating earnings (loss)
available to ordinary shareholders is not a substitute for net income
(loss) determined in accordance with GAAP. Reconciliations to net
income (loss) available to ordinary shareholders are provided in the
following tables.
Scottish Re Group Limited
Supplemental Information - Segment Operating Results
(Stated in Thousands of United States Dollars)
(Unaudited)
Life Reinsurance North America
Three months ended Six months ended
June 30 June 30
------------------- --------------------
2006 2005 2006 2005
--------- --------- --------- ----------
Premiums earned, net $407,549 $408,877 $836,467 $845,972
Investment income, net 136,763 80,956 260,704 158,487
Fee income 3,879 2,007 6,896 4,907
Realized gains (losses) (5,479) 2,208 (19,398) 3,650
Change in value of embedded
derivatives, net 7,366 (22,120) 17,512 (16,635)
--------- --------- ---------- ---------
Total revenues 550,078 471,928 1,102,181 996,381
--------- --------- ---------- ---------
Claims and other policy
benefits 338,626 293,599 685,906 637,787
Interest credited to interest
sensitive contract
liabilities 55,399 31,723 98,100 62,365
Acquisition costs and other
insurance expenses, net 97,280 117,927 181,688 206,205
Operating expenses 14,538 10,221 29,130 21,894
Collateral finance facilities
expense 45,891 10,448 76,434 16,633
Interest expense 3,038 2,657 5,600 5,365
--------- --------- ---------- ---------
Total benefits and expenses 554,772 466,575 1,076,858 950,249
--------- --------- ---------- ---------
Income (loss) before income
taxes and minority interest $(4,694) $5,353 $25,323 $46,132
========= ========= ========== =========
Pre tax operating earnings (loss)
---------------------------------
Pre-tax income (loss) $(4,694) $5,353 $25,323 $46,132
Realized losses (gains) 5,479 (2,208) 19,398 (3,650)
Change in value of embedded
derivatives, net (7,366) 22,120 (17,512) 16,635
--------- --------- ---------- ---------
Pre-tax operating earnings
(loss) $(6,581) $25,265 $27,209 $59,117
========= ========= ========== =========
Scottish Re Group Limited
Supplemental Information - Segment Operating Results (continued)
(Stated in Thousands of United States Dollars)
(Unaudited)
Life Reinsurance International
Three months ended Six months ended
June 30 June 30
------------------ ------------------
2006 2005 2006 2005
--------- -------- --------- --------
Premiums earned, net $37,393 $28,016 $57,496 $54,601
Investment income, net 8,971 2,352 11,960 4,942
Realized gains (losses) (6,908) 88 (8,046) 585
--------- -------- --------- --------
Total revenues 39,456 30,456 61,410 60,128
--------- -------- --------- --------
Claims and other policy benefits 33,475 17,894 60,658 36,979
Acquisition costs and other
insurance expenses, net 6,185 4,053 9,002 6,898
Operating expenses 7,874 7,285 13,651 13,134
--------- -------- --------- --------
Total benefits and expenses 47,534 29,232 83,311 57,011
--------- -------- --------- --------
Income (loss) before income
taxes $(8,078) $1,224 $(21,901) $3,117
========= ======== ========= ========
Pre-tax operating earnings (loss)
---------------------------------
Pre-tax income (loss) $(8,078) $1,224 $(21,901) $3,117
Realized losses (gains) 6,908 (88) 8,046 (585)
--------- -------- --------- --------
Pre-tax operating earnings
(loss) $(1,170) $1,136 $(13,855) $2,532
========= ======== ========= ========
Scottish Re Group Limited
Supplemental Information - Segment Operating Results (continued)
(Stated in Thousands of United States Dollars)
(Unaudited)
Corporate & Other
Three months ended Six months ended
June 30 June 30
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Investment income, net $2,243 $246 $4,335 $604
Fee income 760 778 1,476 1,502
Realized gains (losses) 1,089 (1,362) 2,545 (6)
--------- --------- --------- ---------
Total revenues 4,092 (338) 8,356 2,100
--------- --------- --------- ---------
Acquisition costs and other
insurance expenses, net 1,407 514 1,713 1,033
Operating expenses 16,953 8,994 27,676 16,041
Collateral finance facilities
expense 1,345 1,373 1,889 2,608
Interest expense 4,028 2,156 6,359 5,042
--------- --------- --------- ---------
Total benefits and expenses 23,733 13,037 37,637 24,724
--------- --------- --------- ---------
Loss before income taxes $(19,641) $(13,375) $(29,281) $(22,624)
========= ========= ========= =========
Pre-tax operating loss
----------------------
Pre-tax loss $(19,641) $(13,375) $(29,281) $(22,624)
Realized losses (gains) (1,089) 1,362 (2,545) 6
--------- --------- --------- ---------
Pre-tax operating loss $(20,730) (12,013) $(31,826) $(22,618)
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