EX-99.1 3 ex99.txt PRESS RELEASE Exhibit 99.1 NEWS RELEASE Scott E. Willkomm Scottish Annuity & Life Holdings, Ltd. (441) 298-4364 scott.willkomm@scottishannuity.com For release at 6:00 AM EDT/May 7, 2003 Scottish Annuity & Life Holdings, Ltd. Announces Results for the First Quarter Ended March 31, 2003 HAMILTON, Bermuda - May 7, 2003 - Scottish Annuity & Life Holdings, Ltd. (NYSE:SCT) today reported that net income for the quarter was $7.2 million, or $0.26 per diluted share, as compared to $5.0 million, or $0.23 per diluted share for the prior year period. Net operating earnings increased 46% to $9.2 million, or $0.33 per diluted share for the quarter ended March 31, 2003 as compared to $6.3 million, or $0.30 per diluted share for the prior year period. Net operating earnings is a non-GAAP measurement. We determine net operating earnings for the quarter by adjusting GAAP net income by net realized capital gains and losses as adjusted for the related effects upon the amortisation 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 enhances the understanding of its results of operations by highlighting earnings attributable to the normal, recurring operations of its business. However, net operating earnings are not a substitute for net income determined in accordance with GAAP. "We are continuing to achieve solid growth in all of our business segments," said Michael C. French, Chairman and Chief Executive Officer of Scottish Annuity & Life. "Our focus on quality business with disciplined pricing and growth targets, combined with favorable industry fundamentals, causes us to expect another successful year for the Company." Page 1 of 7 Total revenue for the quarter increased to $96.9 million from $53.5 million for the prior year period, an increase of 81%. Total benefits and expenses increased to $ 89.5 million for the quarter from $48.2 million, an increase of 86%. The increases were principally driven by growth in the Company's reinsurance business, both in North America and in our International operations, and growth in investment income due to the increase in our invested asset base. The Company's total assets were $3.5 billion as of March 31, 2003. The investment portfolio including cash and cash-equivalents, but not including funds withheld at interest, totaled $1.3 billion, and had an average quality rating of "A+", an effective duration of 3.2 years and a weighted average book yield of 4.91%. This compares with a portfolio balance of $1.2 billion, an average quality rating of "AA-", effective duration of 3.0 years and an average book yield of 4.93% as of December 31, 2002. Funds withheld at interest amounted to $1.1 billion, had an average quality rating of "A", an effective duration of 5.2 years and a weighted average book yield of 6.44% at March 31, 2003. This compares with an average quality rating of "A-", an effective duration of 5.4 years and an average book yield of 6.49% at December 31, 2002. The market value of funds withheld at interest amounted to $1.2 billion at March 31, 2003. "While the first quarter of our fiscal year is typically a quiet period for the life reinsurance industry, we were particularly active both quoting and winning new business," said Scott E. Willkomm, President of Scottish Annuity & Life. "Couple that with improving pricing margins and we're off to an excellent start in 2003." As of March 31, 2003, the Company had approximately $74.3 billion of life reinsurance in force in our Reinsurance North America segment covering 1,466,700 lives with an average benefit per life of $51,000. As of December 31, 2002, the Company had approximately $68.0 billion of life reinsurance in force covering 1,387,000 lives. The Company's book value per share was $18.55 at March 31, 2003 as compared to $18.24 per share at December 31, 2002. The Company's earnings conference call will be held at 11:00 am (Eastern Daylight Time) on Wednesday, May 7, 2003. The dial-in number is (703) 736-7226 or (800) 283-1485 and the reservation number is 6483554. A replay of the call will be available beginning at 3:00 pm on May 9, 2003 and running through May 21, 2003. The dial-in number for the replay is (703) 925-2533 or (888) 266-2081 and the PIN code is 6483554. In addition, a simultaneous Web cast, as well as an on-demand replay, of the conference call will be available at the Company's Web site, www.scottishannuity.com/conferencecall. Scottish Annuity & Life Holdings, Ltd. is a global life reinsurance specialist and issuer of customized life-insurance based wealth management products for high net Page 2 of 7 worth individuals and families. Scottish Annuity & Life has operating companies in Bermuda, Charlotte, North Carolina, Dublin, Ireland, Grand Cayman, Luxembourg and Windsor, England. Its flagship operating subsidiaries 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, A3 (good) by Moody's and A- (strong) by Standard & Poor's and World-Wide Reassurance Company Limited, which is rated A- (excellent) by A.M. Best, A (strong) by Fitch Ratings and A- (strong) by Standard & Poor's. Additional information about Scottish Annuity can be obtained from its Web site, www.scottishannuity.com. Certain statements included herein are "forward-looking statements" within the meaning of the federal securities laws. The management of Scottish Annuity & Life Holdings, Ltd. cautions that forward-looking statements are not guarantees, and that actual results could differ materially from those expressed or implied 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, uncertainties relating to the ratings accorded to our insurance subsidiaries; the risk that our risk analysis and underwriting may be inadequate; exposure to mortality experience which differs from our assumptions; risks arising from our investment strategy, including risks related to the market value of our investments, fluctuations in interest rates and our need for liquidity; uncertainties arising from control of our invested assets by third parties; developments in global financial markets that could affect our investment portfolio and fee income; changes in the rate of policyholder withdrawals or recapture of reinsurance treaties; the risk that our retrocessionaires may not honor their obligations to us; terrorist attacks on the United States and the impact of such attacks on the economy in general and on our business in particular; political and economic risks in developing countries; the impact of acquisitions, including the ability to successfully integrate acquired businesses, the competing demands for our capital and the risk of undisclosed liabilities; loss of the services of any of our key employees; losses due to foreign currency exchange rate fluctuations; uncertainties relating to government and regulatory policies (such as subjecting us to insurance regulation or taxation in additional jurisdictions); the competitive environment in which we operate and associated pricing pressures; and changes in accounting principles. Investors are also directed to consider the risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. Page 3 of 7 Scottish Annuity & Life Holdings, Ltd. Financial Highlights (Stated in Thousands of United States Dollars, Except Per Share Amounts) (Unaudited)
Three months ended Three months ended March 31, 2003 March 31, 2002 -------------- -------------- Total revenue $96,876 $53,460 Net operating earnings* 9,233 6,305 Net income 7,243 4,998 Net operating earnings per share Basic $0.34 $0.31 Diluted $0.33 $0.30 Earnings per share Basic $0.27 $0.25 Diluted $0.26 $0.23 Dividends per share $0.05 $0.05 Weighted average shares Outstanding Basic 26,940,294 20,146,139 Diluted 28,120,662 21,352,993 *Excludes effect of realized losses and the related amortization of deferred acquisition costs and taxes. March 31, 2003 March 31, 2002 -------------- -------------- Book value per share Including effect of SFAS 115 $18.56 $16.38
Page 4 of 7 Scottish Annuity & Life Holdings, Ltd. Consolidated Balance Sheets (Stated in Thousands of United States Dollars)
March 31, 2003 December 31, 2002 -------------- ----------------- (Unaudited) Assets Fixed maturity investments $1,197,962 $1,003,946 Preferred equity securities 13,750 -- Investment in unit-linked securities 14,995 16,497 Cash and cash equivalents 105,562 149,666 Other investments 5,648 5,631 Funds withheld at interest 1,129,214 1,101,836 ------------------------- ------------------------- Total investments 2,467,131 2,277,576 Accrued interest receivable 13,166 11,910 Reinsurance balances and risk fees receivable 29,438 38,988 Deferred acquisition costs 231,414 213,516 Amounts recoverable from reinsurers 22,686 22,608 Present value of inforce business 17,073 18,181 Goodwill 35,847 35,847 Fixed assets 7,236 6,493 Due from related party 1,331 817 Other assets 9,738 11,702 Segregated assets 669,644 653,588 ------------------------- ------------------------- Total assets $3,504,704 $3,291,226 ========================= ========================= Liabilities Reserves for future policy benefits $403,599 $386,807 Interest sensitive contract liabilities 1,748,466 1,567,176 Unit-linked contract liabilities 15,490 17,069 Accounts payable and accrued expenses 16,691 19,061 Reinsurance balances payable 6,049 12,989 Deferred tax liability 9,930 9,071 Current income tax payable 2,245 1,873 Long term debt 132,500 132,500 Segregated liabilities 669,644 653,588 ------------------------- ------------------------- Total liabilities 3,004,614 2,800,134 ------------------------- ------------------------- Shareholders' equity Share capital, par value $0.01 per share: Issued and fully paid: 26,944,290 ordinary shares (2002 - 26,927,456) 269 269 Additional paid- in capital 416,859 416,712 Accumulated other comprehensive income Unrealized appreciation on investments, net of tax 12,591 8,930 Other comprehensive income 3,833 4,537 Retained earnings 66,538 60,644 ------------------------- ------------------------- Total shareholders' equity 500,090 491,092 ------------------------- ------------------------- Total liabilities and shareholders' equity $3,504,704 $3,291,226 ========================= =========================
Page 5 of 7 Scottish Annuity & Life Holdings, Ltd. Consolidated Statements of Income (Stated in Thousand of United States Dollars) (Unaudited)
Three months ended Three months ended March 31, 2003 March 31, 2002 ------------------- ------------------ Revenues Premiums earned $64,819 $31,355 Investment income, net 32,365 21,730 Fee income 2,022 2,074 Realized losses (2,330) (1,699) ------------------- ------------------ Total revenues 96,876 53,460 ------------------- ------------------ Benefits and expenses Claims and other policy benefits 42,893 23,887 Interest credited to interest sensitive contract liabilities 15,913 9,178 Acquisition costs and other insurance expenses 20,655 10,830 Operating expenses 8,186 3,917 Interest expense 1,813 343 ------------------- ------------------ Total benefits and expenses 89,460 48,155 ------------------- ------------------ Net income before income taxes 7,416 5,305 Income tax expense 173 307 ------------------- ------------------ Net income before minority interest $7,243 $4,998 =================== ==================
Page 6 of 7 Scottish Annuity & Life Holdings, Ltd. Supplemental Information Regarding Net Operating Earnings (Stated in Thousand of United States Dollars, Except Per Share Amounts) (Unaudited)
Three months ended Three months ended March 31, 2003 March 31, 2002 ------------------- ------------------ Net operating earnings Net income $7,243 $4,998 Realized losses - non taxable companies 1,262 983 Realized losses net of deferred acquisition costs - 1,068 522 taxable companies Provision for taxes -- taxable companies (340) (198) ------------------- ------------------ Net operating earnings $9,233 $6,305 =================== ================== Net operating earnings per share Basic $0.34 $0.31 Diluted $0.33 $0.30 =================== ================== Weighted average number of shares outstanding Basic 26,940,294 20,146,139 Diluted 28,120,662 21,352,993
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