Background
Scottish Re Group is a holding company organised under the laws of the Cayman Islands with its principal executive office in Bermuda. Through its operating subsidiaries, it is engaged in the reinsurance of life insurance, annuities and annuity-type products.

These products are written by life insurance companies and other financial institutions located in the United States, as well as in many other countries around the world.

To a lesser extent, Scottish Re directly issues variable life insurance and variable annuities and similar products to high net worth individuals and families for insurance, investment and estate planning purposes.

Scottish Re has operating companies in Bermuda; Charlotte, North Carolina; Dublin, Ireland; Grand Cayman; and Windsor, England. Through its operating subsidiaries, the Group provides life and annuity reinsurance solutions in more than 45 countries throughout the world.

Scottish Re has quickly grown to become one of the largest life reinsurers serving the US market, growing from zero to a billion dollars in seven years.
The group offers clients excellent financial security, quality claims paying ratings, disciplined underwriting, thorough administrative services and quality professionals in the field. This “flight to quality” is the company’s number one priority and instills a high standard of integrity across all avenues of its business.

Scottish Re is committed to maximising shareholder value by becoming the preeminent global specialist dedicated to helping customers improve their financial condition by providing innovative reinsurance solutions and the highest quality capacity to manage insurable financial risks.

As of December 31, 2004, the number of lives reinsured in North America by Scottish Re was approximately 14.2 million and the gross face amount of in-force business was about $1.0 trillion.

An important part of Scottish Re’s success has been its timing. The traditional life reinsurance industry has experienced significant growth over the past few years. According to one industry survey, the face amount of traditional life reinsurance assumed in the United States grew from approximately $261.0 billion in 1995 to approximately $1.1 trillion in 2003, a 19 percent compounded annual growth rate over the eight years.

Spotlight – Seven short years
Scottish Re is less than seven years old, and in that time has accumulated more than $8 billion dollars in assets.

The company was formed in May 1998 and began business in December of that year. Through a series of key acquisitions, Scottish Re has grown to become the third-largest reinsurer in the North American market.

In October 2001, while 9/11 was reverberating through the financial markets, Scottish Re relocated its executive office to Bermuda and completed the acquisition of World-Wide Holdings and its subsidiary, World-Wide Reassurance. Together, these companies are now called Scottish Re Limited. The World-Wide companies were particularly strong in the Middle East and other non-US territories and now form the platform for the company’s non-US activities.

Two major acquisitions followed in December 2003 and October 2004, when Scottish Re brought ERC Life Insurance Company and then acquired the individual life reinsurance business of ING Re.

Analysis
Scottish Re has two categories of life reinsurance lines of business:

• Traditional Solutions business, in which the company reinsures the mortality risk on life insurance policies written by primary insurers. This business is often referred to as traditional life reinsurance. Scottish Re writes its traditional solutions business predominantly on an automatic basis with respect to newly-written life insurance policies. That means that the company automatically reinsures all policies written by a ceding company that meet the underwriting criteria specified in the treaty with the ceding company.
          In the North American market, Scottish Re’s direct sales force targets the top 60 life insurance companies. Scottish Re offers traditional life reinsurance products outside of North America, focusing primarily on the reinsurance of short-term, group life policies in niche market sectors.
• The company’s Financial  Solutions business offers reinsurance solutions that improve the financial position of clients by increasing their capital availability and statutory surplus. These solutions include contracts under which Scottish Re assumes the investment and persistency risks of existing, as well as newly-written, blocks of business.
          The products reinsured include annuities and annuity-type products, cash value life insurance and, to a lesser extent, disability products that are in a pay-out phase. This line of business includes acquired solutions products in which Scottish Re provides clients with exit strategies for discontinued lines, closed blocks, or lines not providing a good fit for a client’s growth strategies.
          With Scottish Re assuming full responsibility and management of these contracts, clients can focus and concentrate their full efforts and resources on their core strategies.

Senior management
Chairman: Michael French
President and CEO: Scott Wilkomm
CFO: Elizabeth Murphy

Financial data
(half-year to June 30, 2005)
Net premiums earned: $904 million, up 213 percent
Net income: $35.0 million, down 10 percent
Shareholders’ equity: $1.079 billion, up 62 percent

Website
www.scottishre.com