DEF 14A 1 file1.htm FORM DEF 14A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

Filed by the Registrant

Filed by a Party other than Registrant

Check the appropriate box:


	Preliminary Proxy Statement


	Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))


	Definitive Proxy Statement


	Definitive Additional Materials


	Soliciting Material Pursuant to § 240.14a-12

SCOTTISH RE GROUP LIMITED
(Name of Registrant as Specified in Its Charter)

Not Applicable
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):


	No fee required


	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11


	1.	Title of each class of securities to which transaction applies:


	2.	Aggregate number of securities to which transaction applies:


	3.	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):


	4.	Proposed maximum aggregate value of transaction:


	5.	Total fee paid:


	Fee paid previously with preliminary materials:


	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.


	1.	Amount previously paid:


	2.	Form, Schedule or Registration Statement No.:


	3.	Filing Party:


	4.	Date Filed:

Scottish Re Group Limited
P.O. Box HM 2939
Crown House, Second Floor
4 Par-la-Ville Road
Hamilton HM 08, Bermuda

June 22, 2007

Dear Shareholders:

You are cordially invited to attend the Annual General Meeting of Shareholders of Scottish Re Group Limited to be held at the offices of Scottish Re Group Limited at Crown House, Second Floor, 4 Par-la-Ville Road, Hamilton HM 08, Bermuda, on July 18, 2007, at 11:00 a.m., Bermuda time.

The attached Notice of Annual General Meeting and Proxy Statement describes fully the formal business to be transacted at the Annual General Meeting. During the Annual General Meeting, shareholders will consider and vote upon the election of eleven directors, the approval of the 2007 Stock Option Plan and the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2007.

Certain directors and officers will be present at the Annual General Meeting and will be available to respond to any questions you may have. We hope you will be able to attend.

We urge you to review carefully the accompanying material and to return the enclosed proxy card promptly. Please sign, date and return the enclosed proxy card without delay. If you attend the Annual General Meeting, you may vote in person even if you have previously mailed a proxy.

Sincerely,

Paul Goldean
President and Chief Executive Officer

EACH VOTE IS IMPORTANT. PLEASE ENSURE THAT YOUR VOTE COUNTS BY
COMPLETING, SIGNING, DATING AND RETURNING YOUR PROXY.

The date of this proxy statement is June 22, 2007.
The approximate date of mailing for this proxy statement and proxy card(s) is June 22, 2007.

Scottish Re Group Limited
P.O. Box HM 2939
Crown House, Second Floor
4 Par-la-Ville Road
Hamilton HM 08, Bermuda

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held On July 18, 2007

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of Scottish Re Group Limited (the ‘‘Company’’) will be held at the offices of Scottish Re Group Limited at Crown House, Second Floor, 4 Par-la-Ville Road, Hamilton HM 08, Bermuda, on July 18, 2007 at 11:00 a.m., Bermuda time, for the following purposes:


	1.	To elect eleven directors to the Company’s Board of Directors;


	2.	To consider and vote upon the approval of the 2007 Stock Option Plan;


	3.	To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2007; and


	4.	To consider such other business as may properly come before the Annual General Meeting or any adjournments thereof.

Information concerning the matters to be acted upon at the Annual General Meeting is set forth in the accompanying Proxy Statement.

The close of business on June 18, 2007 has been fixed as the record date for determining the shareholders entitled to notice of and to vote at the Annual General Meeting or any adjournments thereof. For a period of at least 10 days prior to the Annual General Meeting, a complete list of shareholders entitled to vote at the Annual General Meeting will be open for examination by any shareholder during ordinary business hours at the offices of the Company at 4 Par-la-Ville Road, Hamilton HM 08, Bermuda.

Shareholders are urged to complete, date, sign and return the enclosed proxy card in the accompanying envelope, which does not require postage if mailed in the United States. Signing and returning a proxy card will not prohibit you from attending the Annual General Meeting or voting in person if you attend the Annual Meeting. Please note that the person designated as your proxy need not be a shareholder.

By order of the Board of Directors,

Paul Goldean
President and Chief Executive Officer

Hamilton, Bermuda
June 22, 2007

PROXY STATEMENT
TABLE OF CONTENTS


	Page
GENERAL QUESTIONS AND ANSWERS		1
PROPOSAL FOR ELECTION OF DIRECTORS (Proposal No. 1)		5
EXECUTIVE OFFICERS		9
BOARD MEETINGS AND COMMITTEES		10
PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP		13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		15
REPORT ON EXECUTIVE COMPENSATION		16
• Overview and Objectives		16
• Components		16
• Restricted Shares		22
• Stock Options		23
MANAGEMENT COMPENSATION		25
• Summary Compensation Table		25
• Grant of Plan-Based Awards for Fiscal Year 2006		26
• Employment Agreement Material Terms		27
• Outstanding Equity Awards at 2006 Fiscal Year-End		31
• Option Exercises and Stock Vested in Fiscal Year 2006		32
• Nonqualified Deferred Compensation for 2006		32
• Potential Payments Upon Termination or Change in Control		33
• Director Compensation for Fiscal Year 2006		34
• Compensation Committee Interlocks and Participation		36
PROPOSAL FOR APPROVAL OF THE 2007 SCOTTISH RE GROUP LIMITED STOCK OPTION PLAN (Proposal No. 2)		37
PROPOSAL FOR RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Proposal No. 3)		41
• Audit Committee Report		41
• Fees Billed to the Company by Ernst & Young LLP		42
• Pre-Approval Policy for Ernst & Young Services		42
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE		43
Annex A — 2007 Scottish Re Group Limited Stock Option Plan		A-1

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Scottish Re Group Limited
P.O. Box HM 2939
Crown House, Second Floor
4 Par-la-Ville Road
Hamilton HM 08, Bermuda

PROXY STATEMENT
For
ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held On July 18, 2007
GENERAL QUESTIONS AND ANSWERS


Q:	When is the Proxy Statement being mailed?


A:	This Proxy Statement of Scottish Re Group Limited (the ‘‘Company,’’ ‘‘we,’’ ‘‘us’’ or ‘‘our’’) will first be mailed on or about June 22, 2007 to our shareholders by the Board of Directors (the ‘‘Board’’) to solicit proxies for use at the Annual General Meeting of Shareholders.


Q:	When is the Annual General Meeting and where will it be held?


A:	The Annual General Meeting will be held on July 18, 2007 at 11:00 a.m., Bermuda time at the offices of Scottish Re Group Limited at Crown House, Second Floor, 4 Par-la-Ville Road, Hamilton HM 08, Bermuda.


Q:	Who is asking for my vote at the meeting?


A:	Our Board asks that you vote on the proposals listed in the Notice of the Annual General Meeting of Shareholders. The votes will be taken at the Annual General Meeting on July 18, 2007, or, if the Annual General Meeting is adjourned, at any later meeting. Our Board recommends that you vote ‘‘FOR’’ each of the proposals.


Q:	Who may attend the Annual General Meeting?


A:	All shareholders of the Company may attend the Annual General Meeting. Shareholders entitled to attend and vote at the above meeting are entitled to appoint one or more proxies to attend and vote in their place. A proxy need not be a shareholder of the Company.


Q:	Who is entitled to vote?


A:	Shareholders as of the close of business on June 18, 2007 (the ‘‘Record Date’’) are entitled to vote at the Annual General Meeting. Each ordinary share is entitled to one vote subject to certain adjustments that may be made under our Articles of Association.


Q:	What am I being asked to vote on?


A:	You will be voting on:


	1.	The election of eleven directors to the Board;


	2.	The approval of the 2007 Scottish Re Group Limited Stock Option Plan (the ‘‘2007 Stock Option Plan’’);


	3.	The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2007; and


	4.	Such other business as may properly come before the Annual General Meeting or any adjournments thereof.


Q:	How do I vote?


A:	You may vote by either attending the Annual General Meeting and voting in person or by appointing a proxy by signing and dating each proxy card you receive and returning it in the enclosed prepaid envelope. We encourage you to complete and send in your proxy card. If you then decide to attend the Annual General Meeting, you may revoke your proxy by voting in person.

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	All shares represented by valid proxies, unless the shareholder otherwise specifies, will be voted:


	•	‘‘FOR’’ the election of each of the eleven persons identified in ‘‘Proposals for Election of Directors’’ as nominees for election as directors of the Company;


	•	‘‘FOR’’ the approval of the 2007 Stock Option Plan;


	•	‘‘FOR’’ the ratification of Ernst & Young LLP as our independent registered public accounting firm for 2007; and


	•	At the discretion of the proxy holders with regard to any other matter that may properly come before the Annual General Meeting.

Where a shareholder has properly specified how a proxy is to be voted, it will be voted by the proxy accordingly.


Q:	Can I change my vote after I have returned my proxy card?


A:	Yes. You may revoke your proxy by:


	•	providing written notice of revocation at our offices, P.O. Box HM 2939 Crown House, Second Floor, 4 Par-la-Ville Road, Hamilton HM 08, Bermuda or to Computershare Investor Services, 1601 Elm Street, Suite 4340, Dallas, Texas 75201 by 5:00 p.m. (Bermuda time) on July 17, 2007; or


	•	attending the Annual General Meeting and voting in person.


Q:	What does it mean if I receive more than one proxy card?


A:	If you receive more than one proxy card, it is because your shares are held in more than one account. You will need to sign and return all proxy cards to ensure that all your shares are voted.


Q:	My ordinary shares are held in ‘‘street name.’’ Will my broker vote my shares at the meeting?


A:	Your broker may have discretion to vote your ordinary shares on the ordinary resolutions if you do not provide the broker with instructions. You should follow the directions provided by your broker(s) regarding how to provide voting instructions for your shares held in street name.


Q:	Who will count the vote?


A:	Representatives of Computershare Investor Services, our transfer agent, will tabulate the votes and act as inspectors of election.


Q:	What constitutes a quorum for the Annual General Meeting?

As of the Record Date, we had 68,383,370 ordinary shares issued, outstanding and entitled to vote at the Annual General Meeting. In addition, the Investors (as defined below) collectively hold 1,000,000 of our convertible preferred shares, which, as of the Record Date, are convertible into 150,000,000 of our ordinary shares, subject to adjustment. The Investors may vote these preferred shares at the Annual General Meeting on an as-converted basis, representing 68.7% of the voting power of all of our shareholders entitled to vote at the meeting. The presence, in person or by proxy, of members holding at least fifty percent (50%) of the issued and outstanding shares entitled to vote at the Annual General Meeting will constitute a quorum for a general meeting called for the purposes of approval of the election of directors, approval of the 2007 Stock Option Plan and the ratification of appointment of our independent registered public accounting firm. If you submit a properly executed proxy card, then you will be considered part of the quorum. Votes that are withheld and broker non-votes will be counted towards a quorum.


Q:	What is the required vote for election of each director?


A:	The required vote for election of each director is the affirmative vote by ordinary resolution of the holders of at least a majority of such shares as, being entitled to do so, vote in person or by proxy at the Annual General Meeting where a quorum is present in person or by proxy.

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Q:	What is the required vote for approval of the 2007 Stock Option Plan?

The required vote for approval of the 2007 Stock Option Plan is the affirmative vote by ordinary resolution of the holders of at least a majority of such shares as, being entitled to do so, vote in person or by proxy at the Annual General Meeting where a quorum is present in person or by proxy, provided that the total votes cast represent over fifty percent in interest of all shares entitled to vote on the proposal, as required under the shareholder approval rules of the New York Stock Exchange. For purposes of determining whether the total votes cast represent over fifty percent in interest of all securities entitled to vote, abstentions will count as shares cast and broker non-votes will not count as votes cast.


Q:	What is the required vote for ratification of the independent registered public accounting firm?


A:	The required vote for the ratification of the independent registered public accounting firm is the affirmative vote by ordinary resolution of the holders of at least a majority of such shares as, being entitled to do so, vote in person or by proxy at the Annual General Meeting where a quorum is present in person or by proxy.


Q:	Who is the Company’s independent registered public accounting firm?


A:	Our Board has selected Ernst & Young LLP as the independent registered public accounting firm to examine the Company’s accounts for the current fiscal year. Representatives of Ernst & Young LLP will be present at the Annual General Meeting. Such representatives may make a statement if they desire to do so and will be available to answer appropriate questions.


Q:	Are there other matters to be acted upon at the Annual General Meeting?


A:	We do not know of any other matters to be presented or acted upon at the Annual General Meeting. If any other matter is presented at the Annual General Meeting on which a vote may properly be taken, the shares represented by proxies will be voted in accordance with the judgment of the proxy holders.


Q:	How much did this proxy solicitation cost?

Georgeson Shareholder Communications, Inc. was hired to assist in the distribution of proxy materials and solicitation of votes at a cost of US $5,500 plus out-of-pocket expenses. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation material to the owners of ordinary shares. Our officers and regular employees may also solicit proxies, but they will not be specifically compensated for such services.


Q:	When are shareholder proposals for inclusion in the proxy statement for the 2008 Annual General Meeting due?

In order to be considered for inclusion in the proxy statement for the 2008 Annual General Meeting of Shareholders, shareholder proposals must be in writing and received by February 21, 2008, by Scottish Re Group Limited, P.O. Box HM 2939, Crown House, Second Floor, 4 Par-la-Ville Road, Hamilton HM 08, Bermuda, Attn: Secretary. Such proposals, including any accompanying supporting statement, may not exceed 500 words.


Q:	When are nominations of persons for election as Directors or shareholder proposals for presentation at the 2008 Annual General Meeting due?

If you desire to submit a proposal for consideration at a meeting of shareholders, or to nominate persons for election as Directors at any meeting duly called for the election of Directors, written notice of your intent to make such proposal or nomination must be given and received by the Company Secretary at our principal executive office not later than (1) with respect to an Annual General Meeting of Shareholders, sixty (60) days prior to the anniversary date of the immediately preceding Annual General Meeting, and (2) with respect to an Extraordinary General Meeting, the close of business on the tenth (10th) day following the date on which notice of such meeting is first sent or given to shareholders.

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Each notice shall describe the proposal or nomination in sufficient detail for a proposal or nomination to be summarized on the agenda for the meeting and shall set forth (1) the name and address, as it appears on the books of the Company, of the shareholder who intends to make the proposal or nomination; (2) a representation that the shareholder is a holder of record of the Company’s shares entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to present such proposal or nomination; and (3) the class and number of shares of the Company’s shares which are beneficially owned by the shareholder. In addition, in the case of a shareholder’s proposal, the notice shall set forth the reasons for conducting such proposed business at the meeting and any material interest of the shareholder in such business.


Q:	Who can help answer my questions?


A:	If you have any questions about the Annual General Meeting you should contact our President and Chief Executive Officer, Paul Goldean, at 441-298-4364.

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PROPOSAL FOR ELECTION OF DIRECTORS

(Proposal No. 1)

The Board is presently comprised of eleven directors divided into three classes: Class I, Class II and Class III. Class I and Class II each consists of four directors and Class III consists of three directors. Each class of directors is generally elected in alternating years with each class serving for a term of three years. Directors generally serve until the Annual General Meeting of Shareholders in the year in which their term expires or until a successor is elected and qualified.

Jeffrey Hughes was named a director by our Board effective June 22, 2006, upon the resignation of William Spiegel, a former director. Mr. Goldean was appointed to our Board, effective August 13, 2006, following the resignation of our former President and Chief Executive Officer, who was also a former director.

Upon the closing of the transactions contemplated by that certain Securities Purchase Agreement, dated November 26, 2006, as amended (the ‘‘Securities Purchase Agreement’’), by and between MassMutual Capital Partners LLC (‘‘MassMutual Capital’’) and SRGL Capital Acquisition, LLC, (collectively, with their respective successors and assigns, the ‘‘Investors’’ ), the Investors are entitled to designate two-thirds of the members of our Board of Directors. Pursuant to such right, Jonathan Bloomer, Christopher Brody, James Butler, James Chapman, Thomas Finke, Robert Joyal, Larry Port, Michael Rollings and Lenard Tessler were elected to the Board of Directors on May 7, 2007.

In addition, for so long as Cypress Merchant B Partners II (Cayman) L.P., Cypress Merchant B II-A C.V., Cypress Side-By-Side (Cayman) L.P. and 55th Street Partners II (Cayman) L.P. (collectively, the ‘‘Cypress Entities’’) in the aggregate beneficially own at least 2.5% of the outstanding voting shares of the Company on a fully diluted basis, the Cypress Entities will be entitled to designate at least one individual for election to the board of directors. Such individual shall be approved by the Investors as a designee of the Cypress Entities, such approval not to be unreasonably withheld or delayed, but subject in any event to Investors’ fiduciary duties and applicable law. Jeffrey Hughes is the Cypress Entities’ nominee to our board of directors.

In accordance with our Articles of Association, as each of the eleven nominees named below was elected by the Board, and not by our shareholders, each is required to stand for election by our shareholders at our 2007 Annual General Meeting.

Upon their election, Class I directors will serve until our Annual General Meeting to be held in 2008, Class II directors will serve until our Annual General Meeting to be held in 2009, and Class III directors will serve until our Annual General Meeting in 2010.

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The Board proposes the election of the following eleven directors of the Company for the terms indicated for each director Class listed below:


Name and Director Class	Age		Position	Current Term Expires
Class I nominees for terms ending in 2008:
Jonathan Bloomer		53	Director		2007
Thomas Finke⁽⁴⁾		43	Director		2007
Robert Joyal^(1)(3)(4)		62	Director		2007
Jeffrey Hughes⁽²⁾		66	Director		2007
Class II Nominees for terms ending in 2009
Christopher Brody⁽²⁾⁽⁴⁾		38	Director		2007
James Chapman⁽¹⁾⁽³⁾		45	Director		2007
Paul Goldean		40	Director		2007
Larry Port⁽²⁾⁽³⁾		56	Director		2007
Class III Nominees for terms ending in 2010
James Butler⁽¹⁾		56	Director		2007
Michael Rollings		43	Director		2007
Lenard Tessler		55	Director		2007

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

(3) Member of the Corporate Governance Committee.

(4) Member of the Investments Committee.

The following sets forth information as to the nominees for election at the Annual General Meeting, including, present principal occupations, other business experience during the past five years and directorships in other publicly-held companies.

Jonathan Bloomer is a partner of Cerberus European Capital Advisors, which is the UK advisory arm of Cerberus Capital Management, L.P (‘‘Cerberus’’). Mr. Bloomer is also Executive Chairman of Lucida plc, a newly formed company that assumes the assets and liabilities of corporate defined pension schemes. Prior to joining Cerberus, Mr. Bloomer worked for Prudential plc, serving as Group Finance Director from January 1995 to March 2000, and Group Chief Executive from March 2000 until May 2005. Mr. Bloomer was also a senior partner in Arthur Andersen’s London financial markets division and managing partner of their European Insurance Practice. Mr. Bloomer was a Member of the Board of the Geneva Association from 2001 to 2005, a member of the board of the Association of British Insurers from 2000 to 2005, Chairman of the Financial Services Practitioner Panel of the Financial Services Authority from 2003 to 2005 and Vice Chairman until October 2006. He was also a member of the Urgent Issues Task Force of the Accounting Standards Board from 1995 to 1999 and is currently a member of the Finance Committee of the NSPCC.

Christopher Brody joined Cerberus in 2001 and is now a Managing Director. From 1996 to 2001 Mr. Brody was a partner at TGV Partners, a private equity firm. At TGV, he was responsible for identifying, analyzing, financing, executing and monitoring leveraged buy-out opportunities. Mr. Brody also worked at Fried, Frank, Harris, Schriver and Jacobson, LLP as head of the corporate research group which focused on M&A, financing, restructuring and bankruptcy transactions. Mr. Brody is also a director of SLI Holdings, LLC and Horizon National Services, LLC. He is a 1991 graduate of Brandeis University.

James Butler was a partner at KPMG LLP from 1984 until his retirement in December 2006, primarily serving insurance clients, including reinsurance, property and casualty, financial guaranty, life and health insurers. Mr. Butler holds a B.A. from The College of the Holy Cross.

James Chapman has been non-executive Vice Chairman of JetWorks Leasing, LLC, an aircraft management services company since December 2004. Prior to this, Mr. Chapman worked with

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Regiment Capital Advisors, LLC, from January 2003 to December 2004 and acted as a capital markets and strategic planning consultant with private companies, public companies and hedge funds (including Regiment), across a wide range of industries. Mr. Chapman also worked for The Renco Group, Inc., a multi-billion dollar private company in New York, from 1996 to 2001. Mr. Chapman serves as a member of the board of directors of AerCap Holdings N.V., Coinmach Service Corp., along with several private companies. Mr. Chapman holds a BA, magna cum laude, with distinction, from Dartmouth College, was Phi Beta Kappa and also a Rufus Choate Scholar. Mr. Chapman holds an M.B.A., with distinction, from Dartmouth College and is an Edward Tuck Scholar.

Thomas Finke serves as Head of The Bank Loan Team at Babson Capital Management LLC, an investment management firm (‘‘Babson’’), and has over 18 years of industry experience. Mr. Finke joined Babson in June 2002 as part of Babson’s acquisition of First Union Institutional Debt Management (‘‘IDM’’), where he was Co-Founder and President. Prior to founding IDM, Mr. Finke started the Par Loan Trading Desk at First Union Securities. Before that, he served as a Vice President at Bear, Stearns & Co. and as a member of the founding Board of Directors of the Loan Syndications and Trading Association. Mr. Finke holds a B.A. from the University of Virginia’s McIntire School of Commerce and an M.B.A. from Duke University’s Fuqua School of Business.

Paul Goldean was elected by the Board to serve as a director in August 2006 to fill a vacancy created by the resignation of our former director Scott Willkomm. Mr. Goldean is also our President and Chief Executive Officer, named by the Board effective July 2006. From February 2004 until he was named President and Chief Executive Officer, Mr. Goldean served as our Executive Vice President and General Counsel. He joined the Company in February 2002 as our Senior Vice President and General Counsel. Prior to joining the Company, Mr. Goldean worked at Jones, Day, Reavis & Pogue from March 2000 to February 2002 where, among other things, he acted as outside counsel to the Company. From 1997 to 2000, Mr. Goldean worked with the law firm of Strasburger & Price, L.L.P. Mr. Goldean received his B.B.A. from the University of Texas at El Paso and his J.D. from Southern Methodist University.

Jeffrey Hughes was elected by the Board to serve as a director in June 2006 to fill a vacancy created by the resignation of our former director William Spiegel. Mr. Hughes is a founding partner of The Cypress Group, a New York based private equity firm and has been its Vice Chairman for Cypress since 1994. He also serves as a director of Communication & Power Industries, Inc. and Financial Guarantee Insurance Corporation. Mr. Hughes has a lengthy record of business accomplishments and many years of board experience across a range of industries.

Robert Joyal has been a Director of Jefferies Group, Inc. since January 2006. He was the President of Babson from 2001 until his retirement in June 2003, and also served as their Managing Director from 2000 until 2001. Prior to that, Mr. Joyal worked for Mass Mutual Financial Group (‘‘MassMutual’’) as their Executive Director from 1997-1999, and Vice President and Managing Director from 1987-1997. Mr. Joyal is a trustee of each of MassMutual Corporate Investors and MassMutual Participation Investors (closed end investment companies) and a director of MassMutual Select Funds and the MML Series Investment Fund (open end investment companies). Mr. Joyal is also a director of Pemco Aviation Group (Aircraft Maintenance & Overhaul), and various Private Equity and Mezzanine Funds sponsored by First Israel Mezzanine Investors.

Larry Port is President and Managing Director of MassMutual Capital and is responsible for MassMutual’s worldwide corporate development activity and private equity group. Before this, he also served as Senior Vice President and Deputy General Counsel in the Law Division of MassMutual. Prior to joining MassMutual Capital, Mr. Port spent 19 years at Texaco Inc. Mr. Port holds a B.A. from the University of Virginia and a J.D. from the University of Pittsburgh, School of Law.

Michael Rollings joined MassMutual in 2001, and has served as Executive Vice President and Chief Financial Officer since June 2006. Prior to assuming this role, Mr. Rollings also served as Senior Vice President, Acting Chief Financial Officer, Senior Vice President and Deputy Chief Financial Officer. Before joining MassMutual, Mr. Rollings spent 13 years at Morgan Stanley and Co.

Lenard Tessler joined Cerberus in 2001 and is a Managing Director. Prior to joining Cerberus, Mr. Tessler served as managing partner of TGV Partners, a private equity firm which he founded.

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Mr. Tessler serves as a member of the board of directors of GMAC LLC, NewPage Corporation and BlueLinx Corporation. Mr. Tessler is a 1973 graduate of the University of Miami, and holds an M.B.A. from Farleigh Dickenson University.

Vote Required

In order to be elected a director, each of the above nominees must receive the affirmative vote by ordinary resolution of the holders of at least a majority of such shares as, being entitled to do so, vote in person or by proxy at the Annual General Meeting where a quorum is present in person or by proxy. Votes that are withheld, abstentions and broker non-votes will be deemed present and entitled to vote but will not be counted as a vote for or against the election of each director, and therefore will not have the effect of a vote against the election of each director. We intend to conduct all voting at the Annual General Meeting by poll.

THE BOARD RECOMMENDS VOTING ‘‘FOR’’ THE ELECTION OF EACH OF THE ELEVEN
NOMINEES FOR THE COMPANY’S BOARD OF DIRECTORS.

All the nominees have indicated their willingness to serve as members of the Board if elected; however, in case any nominee becomes unavailable for election to the Board for any reason not presently known or contemplated, the proxy holders have discretionary authority to vote the proxy for a substitute nominee or nominees.

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Executive Officers

The following table sets forth the names, ages, and current positions held with our company for each of our Executive Officers as of June 14, 2007:


Name	Age		Position
Paul Goldean		40	President and Chief Executive Officer
Jeffrey Delle Fave		40	Executive Vice President, Corporate Tax
Duncan Hayward		42	Chief Accounting Officer
David Howell		40	Chief Executive Officer, Scottish Re Holdings Limited
Thomas McAvity, Jr.		65	Executive Vice President, Chief Investment Strategist
Clifford Wagner		48	President and Chief Executive Officer, Scottish Holdings, Inc.

Information regarding Mr. Goldean, our President and Chief Executive Officer, is provided under the caption, ‘‘Proposal for Election of Directors,’’ above.

Jeffrey Delle Fave joined our Company in September 2005 as our Executive Vice President, Corporate Tax. Prior to joining us, Mr. Delle Fave served in various different capacities was with Ernst & Young LLP from July 1993 until he joined the Company in 2005, serving as a tax partner with Ernst & Young from 2003 until he left in 2005.

Duncan Hayward was named the Company’s Chief Accounting Officer in June 2007. Mr. Hayward also serves as Chief Financial Officer of our international segment from August 2006 until June 2007. From 2003 until joining the Company in 2006, Mr. Duncan worked for Swiss Re Life & Health Zurich where he was responsible for running the Finance and Administration teams for the Asian, Central European and Latin American life reinsurance businesses. From 1997 until 2003, he was with Royal&SunAlliance in a group finance role. Prior to that time, Mr. Hayward was with PriceWaterhouseCoopers in the Insurance Audit Group.

David Howell has served as Chief Executive Officer of Scottish Re Holdings Limited since May 2006. Mr. Howell joined us in April 2006 and served as our Deputy Chief Executive Officer until being named Chief Executive Officer of Scottish Re Holdings Limited. From 2001 until joining us, Mr. Howell served as the head of pricing for Swiss Re. He served as Corporate Rick Management Actuary for Swiss Re from 2000 until 2001. Mr. Howell holds a Bachelor of Mathematics from the University of Waterloo and is a Fellow of the Society of Actuaries.

Thomas McAvity, Jr. has served as our Executive Vice President and Chief Investment Officer since September 2000. Mr. McAvity’s investment management career spans 30 years and all major asset classes. From 1996 to 2000, he was Vice President-Asset Liability Management with Allstate Life Insurance Company in Northbrook, Illinois. From 1989 to 1996, he was Vice President-Quantitative Research in the investment management subsidiary of Lincoln National Corporation. Prior to that, he held positions at Alex, Brown & Sons, Inc. and B. F. Saul Company. He is a graduate of Yale University and holds an M.B.A. from Harvard Business School.

Clifford Wagner has been Executive Vice President and Chief Actuary since January 2002. Mr. Wagner served as Executive Vice President and Chief Actuary, Risk Management of Scottish Re (U.S.), Inc. from December 1999 to December 2001. Prior to joining Scottish Re (U.S.), Inc., Mr. Wagner worked as a marketing actuary with Transamerica Reinsurance Company from November 1995 to December 1999. His 20-plus-year career in the actuarial profession includes 10 years with Time Insurance (now part of the Fortis Group) and three years with the Hartford Insurance Group. Mr. Wagner holds a B.S. degree in actuarial mathematics from the University of Wisconsin, Madison. He is a Fellow of the Society of Actuaries (FSA) and a Member of the American Academy of Actuaries (MAAA).

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BOARD MEETINGS AND COMMITTEES

The Board met twenty-four times during fiscal year 2006. The Board met an unusually high number of times as a result of the negotiation and consummation of the Securities Purchase Agreement and the transaction contemplated thereby. Each of the individual Board committees held separate meetings during fiscal year 2006. Overall attendance at board and committee meetings was approximately 96%. The Board has adopted the New York Stock Exchange’s standards for determination of director independence. Directors are encouraged to attend the Company’s Annual General Meeting of shareholders. All directors attended the 2006 Annual General Meeting of shareholders held on May 3, 2006.

The Board had four standing committees in fiscal year 2006: the Audit Committee, the Compensation Committee, the Corporate Governance Committee and the Finance and Investment Committee (renamed the Investments Committee in fiscal year 2006). Each of these committees operates pursuant to a written charter, which may be found on our website at www.scottishre.com. Shareholders may request free printed copies of the charters for our Board Committees and our Corporate Governance Guidelines from: Scottish Re Group Limited, P.O. Box HM 2939, Crown House, Second Floor, 4 Par-la-Ville Road, Hamilton HM 08, Bermuda, Attn: Secretary.

•

The Audit Committee: (1) recommends to the Board annually, and at other appropriate times, the firm to be retained as our independent registered public accounting firm and, in connection therewith, reviews the professional services to be provided by the independent registered public accounting firm and the proposed fees therefore, and the independence of such firm from our management, considering, among other things, non-auditing services to be provided by the independent registered public accounting firm; (2) reviews with the independent registered public accounting firm their plans for and scope of their annual audit and other examinations; (3) reviews with the independent registered public accounting firm the report of their annual audit, or proposed report of their annual audit, the accompanying management letter, if any, and the reports of the results of such other examinations that they may undertake; (4) reviews with our appropriate officers and the independent registered public accounting firm the annual financial statements; (5) reviews with the appropriate officers our ongoing audit activities, examinations, and the results thereof; (6) reviews with the appropriate officers and the independent registered public accounting firm the adequacy of our internal accounting controls over financial reporting, auditing procedures, and practices and its financial, auditing, and accounting organizations and personnel; (7) reviews with the appropriate officers any recommendations made by the independent registered public accounting firm, as well as such other matters, if any, as such persons may desire to bring to the attention of the Audit Committee; and (8) reviews such other matters in relation to our accounting, auditing, and financial reporting practices and procedures as the Audit Committee may deem desirable in connection with the review function described above. The Audit Committee met eight times during fiscal year 2006. Until May 2007, the Audit Committee members were Robert Chmely, Jean-Claude Damerval and Lord Norman Lamont.

•

The Compensation Committee met ten times during fiscal year 2006. The Compensation Committee oversees the administration of the Company’s Second Amended and Restated 1998 Stock Option Plan, the 1999 Stock Option Plan, the Harbourton Employee Options, the 2001 Stock Option Plan and the 2004 Equity Compensation Plan (collectively, the ‘‘Option Plans’’). The Compensation Committee: (1) recommends the Company’s compensation policies and procedures to the Board; (2) reviews performance of Company’s officers; (3) approves base salary levels; (4) oversees the administration of the Option Plans and other incentive compensation plans; (5) reviews corporate goals and objectives, approved by the full Board relevant to CEO compensation, evaluates the performance of the CEO in light of these goals and objectives and sets the CEO’s compensation level based on this evaluation; and (6) reviews committee member qualifications. Until May 2007, the Compensation Committee members were Jeffrey Hughes, Hazel O’Leary and Lord Norman Lamont.


•	The Corporate Governance/Nominating Committee: (1) identifies and makes recommendations to the Board on individuals qualified to serve as Board members; (2) develops and recommends to

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the Board corporate governance guidelines applicable to the Company, which may be found on our website at www.scottishre.com; (3) takes a leadership role in shaping the corporate governance of the Company; (4) reviews and recommends the renomination of incumbent directors; (5) reviews and recommends committee appointments; (6) leads the Board in its annual review of the Board’s performance; and (7) performs other related tasks, such as studying the size, committee structure, and meeting frequency of the Board. In addition, the Corporate Governance/Nominating Committee develops and reviews background information for candidates for the Board, including those recommended by shareholders, and makes recommendations to the Board regarding such candidates. Any shareholder wishing to propose a nominee to the Board should submit a recommendation in writing to the Company’s Secretary, indicating the nominee’s qualifications and other relevant information and providing confirmation of the nominee’s consent. The Corporate Governance/Nominating Committee met four times during fiscal year 2006. Until May 2007, the Corporate Governance/Nominating Committee members were William Caulfeild-Browne, Michael Austin and Robert Chmely.

In carrying out its function to nominate candidates for election to the Board, the Corporate Governance/Nominating Committee considers a mix of skills, experience, character, commitment, and diversity of background, all in the context of the requirements of the Board at that point in time. The Corporate Governance/Nominating Committee believes that each candidate should be an individual who has demonstrated integrity and ethics in such candidate’s personal and professional life, have an understanding of elements relevant to the success of a publicly-traded company and have established a record of professional accomplishment in such candidate’s chosen field. Each candidate should be prepared to participate fully in Board activities, including attendance at, and active participation in, meetings of the Board, and not have other personal or professional commitments that would, in the Corporate Governance/Nominating Committee’s judgment, interfere with or limit such candidate’s ability to do so. Each candidate should also be prepared to represent the best interests of our shareholders and not just one particular constituency. Additionally, in determining whether to recommend a director for re-election, the Corporate Governance/Nominating Committee also considers the director’s past attendance at Board and Committee meetings and participation in and contributions to the activities of the Board. The Corporate Governance/Nominating Committee has no stated specific, minimum qualifications that must be met by a candidate for a position on our Board.

The Corporate Governance/Nominating Committee’s methods for identifying candidates for election to the Board (other than those proposed by our shareholders, as discussed below) include the solicitation of ideas for possible candidates from a number of sources — members of the Board; our executives; individuals personally known to the members of the Board; and other research, including database and Internet searches. The Corporate Governance/Nominating Committee may also from time to time retain one or more third-party search firms to identify suitable candidates.

Any of our shareholders may nominate one or more persons for election as a director at the annual meeting of shareholders if the shareholder complies with the notice, information and consent provisions contained in our Articles of Association. In addition, the notice must include any other information required pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. The Corporate Governance/Nominating Committee will consider all candidates identified through the processes described above, and will evaluate each of them, including incumbents, based on the same criteria.

•

The Investments Committee establishes and monitors the Company’s investment policies, the performance of the Company’s investment managers and the Company’s banking and/or financing relationships. The Investments Committee met four times during fiscal year 2006. Until May 2007, the Investments Committee members were Jean-Claude Damerval, Hazel O’Leary, Robert Chmely, Michael French and Lord Norman Lamont.

Our Board has determined that we are a ‘‘controlled company’’ pursuant to Rule 303A of the New York Stock Exchange Listed Company Manual. A company listed on the New York Stock

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Exchange is a controlled company when more than 50% of it’s voting power is held by an individual, a group or another company. Our Board determined that we are a controlled company because the Investors, as a group, currently hold securities representing approximately 68.7% of the voting power of all of our shareholders, subject to certain adjustments, and because the Investors each filed Schedule 13Ds with the Securities and Exchange Commission expressly affirming their membership in a group. As a controlled company, we are exempted from the requirements of certain New York Stock Exchange corporate governance rules, including the requirements that a listed company have a majority of independent directors on its Board and solely independent directors on its compensation committee and corporate governance committee. The controlled company exception does not modify the independence requirements for the Audit Committee, and the Company intends to comply with the requirements of the Sarbanes-Oxley Act and the New York Stock Exchange rules, which require that the Audit Committee be comprised entirely of independent directors. In May 2007, the Board concluded that four of our eleven directors, James Butler, James Chapman, Jeffrey Hughes and Robert Joyal, are independent in accordance with the director independence standards of the New York Stock Exchange, and it has also determined that none of them has a material relationship with the Company that would impair their independence from management or otherwise compromise his or her ability to act as an independent director.

The current members of the Audit Committee are James Butler (chairman), James Chapman and Robert Joyal. The Board, in its business judgment, has determined that all of the current members of the Audit Committee are ‘‘independent,’’ as defined in Section 303A.02 and 303A.06 of the New York Stock Exchange’s listing standards and as required under Rule 10(a)(3) of the Securities Exchange Act of 1934, as amended. The Audit Committee has determined that Mr. Butler qualifies as an ‘‘audit committee financial expert’’ under the rules of the Securities and Exchange Commission.

The current members of the Compensation Committee are Christopher Brody (chairman), Jeffrey Hughes and Larry Port. As we are a controlled company, we are exempt from Section 303A.05 of the New York Stock Exchange’s listing standards, which requires that listed companies must have a compensation committee composed entirely of independent directors.

The current members of the Corporate Governance/Nominating Committee are Larry Port (chairman), James Chapman and Robert Joyal. As we are a controlled company, we are exempt from Section 303A.04 of the New York Stock Exchange’s listing standards, which requires that listed companies must have a corporate governance/nominating committee composed entirely of independent directors.

The current members of the Investments Committee are Robert Joyal (chairman), Thomas Finke and Christopher Brody.

The non-management directors of the Company meet at regularly scheduled executive sessions without management present. Pursuant to the Company’s Corporate Governance Guidelines, executive sessions of the non-management directors are scheduled at every regular Board meeting, and as requested by a director. Mr. Bloomer has been selected to preside at all regularly scheduled executive sessions of non-management directors (the ‘‘Presiding Director’’).

How to Contact the Board of Directors

Shareholders who wish to communicate with the Board, a particular director, any non-management director or the Presiding Director may send a letter to the Secretary of the Company at Scottish Re Group Limited, P.O. Box HM 2939, Crown House, Second Floor, 4 Par-la-Ville Road, Hamilton HM 08, Bermuda. The mailing envelope must clearly identify the correspondence as a ‘‘Shareholder-Board Communication,’’ ‘‘Shareholder-Director Communication’’, ‘‘Shareholder-non-management Director Communication’’ or ‘‘Shareholder-Presiding Director Communication.’’ All such letters must identify the author as a shareholder and clearly state whether the intended recipients are members of the Board or just certain specified individual directors. The Secretary will make copies of all such letters and circulate them to the appropriate director or directors.

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PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP

The following table sets forth the beneficial ownership of the ordinary shares of the Company by all persons who beneficially own 5% or more of the ordinary shares, by each director and named executive officer and by all directors, director nominees and executive officers as a group as of June 14, 2007.


Name and Address of Beneficial Owners⁽¹⁾	Amount of Ordinary Shares Beneficial Ownership	Percent of Class
Investor Group	150,000,000⁽²⁾		68.7	%
CMBP II (Cayman) Ltd.	9,330,510⁽³⁾		13.6	%⁽⁴⁾
Jonathan Bloomer	0			*
Christopher Brody	0			*
James Butler	0			*
James Chapman	0			*
Thomas Finke	0			*
Paul Goldean	78,640⁽⁵⁾			*
Jeffrey Hughes	10,000			*
Robert Joyal	100,000			*
Larry Port	0			*
Michael Rollings	0			*
Lenard Tessler	0			*
David Howell	80,000⁽⁶⁾			*
Hugh McCormick	116,922⁽⁷⁾			*
Dean Miller	124,000⁽⁸⁾			*
Clifford Wagner	55,965⁽⁹⁾			*
Seth Vance	0⁽¹⁰⁾			*
Scott Willkomm	0⁽¹¹⁾			*
All directors, director nominees and executive officers as a group (sixteen persons)	467,205			*

*	Less than 1%

(1)	Except as otherwise indicated, the address for each beneficial owner is c/o Scottish Re Group Limited, P.O. Box HM 2939, Crown House, Second Floor, 4 Par-la-Ville Road, Hamilton, HM 08, Bermuda.

(2)

The Investors each purchased 500,000 shares of the Company’s newly issued convertible cumulative participating preferred stock (the ‘‘Convertible Shares’’) pursuant to the terms of the Securities Purchase Agreement. Such 500,000 Convertible Shares may be converted into 75,000,000 ordinary shares, or an aggregate 150,000,000 ordinary shares between both Investors, at any time, and will automatically convert on the ninth anniversary of the issue date if not previously converted, subject to certain adjustments. On January 4, 2007, SRGL Acquisition, LLC assigned its rights and obligations under the Securities Purchase Agreement to SRGL Acquisition, LDC, an affiliate of Cerberus (‘‘SRGL LDC’’). Pursuant to the Assignment and Assumption Agreements dated as of June 5, 2007 between MassMutual Capital and each of Benton Street Partners I, L.P., Benton Street Partners II, L.P. and Benton Street Partners III, L.P (collectively, the ‘‘Funds’’), MassMutual Capital assigned its Convertible Shares to the Funds. The sole general partner of each of the Funds is Benton Street Advisors, Inc., an indirect wholly-owned subsidiary of Massachusetts Mutual Life Insurance Company. On June 5, 2007, the Investors and the Funds entered into an Amended and Restated Investors Agreement dated as of June 5, 2007 (the ‘‘Amended and Restated Investors Agreement’’), in order to reallocate voting and governance rights and obligations of MassMutual Capital to and among the Funds. Pursuant to the Amended and Restated Investors Agreement, the Investors and the Funds agreed, among other things, to: (i) certain restrictions on the transfer of Convertible Shares, (ii) certain voting provisions with respect to the ordinary shares, (iii) the election of a certain

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number of directors to the Company’s Board and (iv) a third party sale process. Because of the Amended and Restated Investors Agreement, for the purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, Massachusetts Mutual Life Insurance Company and the Funds are deemed to be members of a group with SRGL LDC and, therefore, the beneficial owners of the securities of the Company beneficially owned by SRGL LDC. On June 5, 2007, SRGL LDC subscribed for and purchased limited partnership interests in Benton Street Partners III, L.P., pursuant to a Subscription Agreement dated as of June 5, 2007 by and between Benton Street Partners III, L.P. and SRGL LDC. Benton Street Partners III, L.P. holds 134,667 Convertible Shares. Stephen Feinberg, directly or through one or more intermediate entities, possesses the sole power to vote and the sole power to direct the disposition of all securities of the Company held directly by Cerberus. In addition, pursuant to an Amended and Restated Limited Partnership Agreement dated as of June 5, 2007 by and among Benton Street Advisors, Inc., MassMutual Capital and SRGL LDC, SRGL LDC shares certain rights over the voting and disposition of securities of the Company held by Benton Street Partners III, L.P. Mr. Feinberg, directly or through one or more intermediate entities, exercises such rights held by SRGL LDC. Because SRGL LDC holds 500,000 Convertible Shares and exercises certain rights over the voting and disposition of 134,667 Convertible Shares, which Convertible Shares, in the aggregate, may be converted into 95,200,050 ordinary shares, Mr. Feinberg is deemed to beneficially own 95,200,050 ordinary shares, or 58.3% of the ordinary shares deemed issued and outstanding as of June 5, 2007. In addition, because of the Amended and Restated Investors Agreement, Mr. Feinberg is deemed to beneficially own the 365,333 Convertible Shares, which may be converted into 54,799,950 ordinary shares, beneficially owned by Massachusetts Mutual Life Insurance Company. The Investor Group beneficially owns 150,000,000 ordinary shares, or 68.7% of the ordinary shares deemed issued and outstanding as of that date. The address for Massachusetts Mutual Life Insurance Company is 1295 State Street, Springfield, Massachusetts 01111. The address for Stephen Feinberg is 299 Park Avenue, 22^nd Floor, New York, New York 10171.

(3)

Based on a Schedule 13D filed by CMBP II (Cayman) Ltd. with the Securities and Exchange Commission on November 26, 2006, as a joint filer with Cypress Associates II (Cayman) L.P., Cypress Merchant B Partners II (Cayman) L.P., Cypress Merchant B II-A C.V., Cypress Side-by-Side (Cayman) L.P. and 55th Street Partners II (Cayman) L.P. The address of the joint filers is Cypress Associates II (Cayman) L.P., c/o The Cypress Group L.L.C., 65 East 55th Street, 28th Floor, New York, New York 10022.

(4)	Represents 13.6% of the issued and outstanding ordinary shares of the Company. Beneficial ownership would be less than 5% taking into account the conversion of the Convertible Shares.

(5)	Includes 23,640 ordinary shares of the Company subject to immediately exercisable options.

(6)	Includes 50,000 ordinary shares of the Company subject to immediately exercisable options.

(7)	Includes 60,000 ordinary shares of the Company subject to immediately exercisable options. Mr. McCormick is no longer an employee of the Company. Share ownership is based on the best information available to us.

(8)	Includes 50,000 ordinary shares of the Company subject to immediately exercisable options. Mr. Miller is no longer an employee of the Company. Share ownership is based on the best information available to us.

(9)	Includes 35,000 ordinary shares of the Company subject to immediately exercisable options.

(10)	Mr. Vance is no longer an employee of the Company. Share ownership is based on the best information available to us.

(11)	Mr. Willkomm is no longer an employee of the Company. Share ownership is based on the best information available to us.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On July 31, 2006, the Board appointed Mr. Schafer and Bill Caulfeild-Browne, each of whom were former directors, to a special committee, The Office of the Chairman, to assist executive management in directing us, for a term of three months beginning August 1, 2006. On October 25, 2006, the Board extended this appointment an additional month, to end on November 30, 2006. During such time, Mr. Schafer was compensated at a rate of $300,000 per month for a total of $1,200,000 and Mr. Caulfeild-Browne was compensated at a rate of $200,000 per month for a total of $800,000. On November 26, 2006, the Board resolved, effective November 30, 2006, to terminate the Office of the Chairman because, as a result of the execution of the Securities Purchase Agreement, the Board determined that the position was no longer necessary. Mr. Schafer and Mr. Caulfeild-Browne remained directors of our company until May 2007. The Board also approved a success plan for Mr. Schafer and Mr. Caulfeild-Browne to create an incentive to obtain the best possible transaction for shareholders, with payments to be made if our sales price in any transaction exceeded $12 per share. Because the effective purchase price of the sale of our convertible shares pursuant to the Securities Purchase Agreement executed on November 26, 2006 is $4 per share, we did not make any payment to Mr. Schafer or Mr. Caulfeild-Browne under this success plan.

As of May 7, 2007, as a result of the closing of the transactions contemplated by the Securities Purchase Agreement, the Investors now hold securities representing approximately 68.7% of the voting power of all of the Company’s shareholders, and the right to nominate directors for election to the board. Pursuant to this right, Jonathan Bloomer, Christopher S. Brody, James J. Butler, James N. Chapman, Thomas Finke, Robert Joyal, Larry Port, Michael Rollings and Lenard B. Tessler, were elected to the board of directors for terms ending in 2007. Mr. Bloomer is a partner of Cerberus European Capital Advisors, and Mr. Brody and Mr. Tessler are Managing Directors of Cerberus Capital Management. Mr. Rollings is currently Executive Vice President and Chief Financial Officer of Mass Mutual. Mr. Joyal is a trustee of each of MassMutual Corporate Investors and MassMutual Participation Investors and a director of MassMutual Select Funds and the MML Series Investment Fund. Mr. Port is President and Managing Director of MassMutual Capital and is responsible for MassMutual’s worldwide corporate development activity and private equity group. On March 9, 2007, Scottish Annuity & Life Insurance Company (Cayman) Ltd., the Company and each subsidiary of the Company listed as a guarantor on the signature pages thereto entered into a term agreement (the ‘‘Term Loan Agreement’’) with Ableco Finance LLC, an affiliate of Cerberus, and MassMutual. The Term Loan Agreement was terminated effective May 7, 2007 in connection with the consummation of the transactions contemplated by the Securities Purchase Agreement.

Related Party Transaction Policies and Procedures

Our Board has adopted a written Code of Ethics & Business Conduct which applies to all our employees, officers and directors. In keeping in the spirit of such code, and specifically the Conflicts of Interest section, it is our policy not to enter into any transactions with one of our executive officers, directors or director nominees, or stockholders known to beneficially own over 5% of a class of our voting stock or their related persons, unless the transaction is approved by a majority of our disinterested Directors after full disclosure.

The Investors will be restricted from entering into affiliate transactions with us without the approval of non-management directors who are not affiliated with the Investors, or the approval of a majority of holders of our ordinary shares (excluding any shares held by the Investors), subject to an exception for certain transactions entered into in the ordinary course of business on terms that are no less favorable to us than those that could have been obtained in a comparable transaction by us with an unrelated person.

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Overview and Objectives

Our compensation program is intended to attract, retain and motivate the key people necessary to lead us to achieve our strategic objective of increased shareholder value over the long term, reflecting our belief that executive compensation should seek to align the interests of our executives with those of our shareholders.

In addition, we believe compensation should be determined within a competitive framework based on overall financial results, teamwork and individual contributions that help build shareholder value. The primary objectives of our compensation program are to:


	•	provide a direct link between pay and performance;


	•	allocate a larger percentage of executive compensation to pay that is conditional or contingent in order to positively influence behavior and support accountability;


	•	offer total compensation opportunities that are fully competitive with external markets in design and pay level; and


	•	emphasize the need to focus on shareholder value, in addition to providing competitive value to our customers.

Components

Our compensation program utilizes five components to meet our compensation objectives: base salary, annual and other incentive bonuses, long-term compensation, retirement benefits and executive perquisites and generally available benefit programs.

Base Salaries

In establishing base salaries for our executive officers, Paul Goldean, David Howell, Dean Miller¹, Hugh McCormick² and Cliff Wagner³ (the ‘‘Named Executive Officers’’), we have adopted a strategy of setting executive salaries at or above market to retain and attract key executives, while providing incentive compensation pay opportunities, based on performance achievement. We set the salary ranges in this manner to ensure that our base salary practices do not put us at a competitive disadvantage in retaining and attracting key executives while ensuring an appropriate cost structure. With the assistance of a compensation consultant, the Compensation Committee selected a comparable peer group based on business, relevance, size and performance, availability of information, and inputs from key executives and Directors. The peer group includes AmerUS Group Co., Arch Capital Group Ltd., Delphi Financial Group, Inc. and Max Re Capital Ltd. The goal of the Compensation Committee is to position cash compensation (base salary and bonuses) between the median and 75th percentile of the peer group. The Compensation Committee also allocates the compensation of the Named Executive Officers among cash and equity with the assistance of the compensation consultant and based on the allocations of the peer group. The Compensation Committee of our Board reviews the base salaries of our Named Executive Officers annually and may adjust them from time to time to recognize changes in levels of responsibility, individual contributions toward the creation of shareholder value and the competitive market (particularly the peer group) for the services of the individuals possessing the skills and experience of our Named Executive Officers. The Compensation Committee uses the services of a compensation consultant to conduct regular peer group analyses and to assist the Committee to establish competitive base salaries.

¹	Mr. Miller’s employment with the Company terminated on May 18, 2007.

²	Mr. McCormick’s employment with the Company terminated on June 8, 2007.

³	On May 17, 2007, the Company announced Mr. Wagner will step down as Chief Executive Officer of the Company’s North American segment later in fiscal year 2007.

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In October 2006, the Compensation Committee adjusted Mr. Goldean’s base salary from $450,000 to $550,000, as reflected in an amendment to his employment agreement dated October 25, 2006, to recognize the increased level of responsibility commensurate with his appointment as our President and Chief Executive Officer. The Compensation Committee considered, but did not adjust the base salaries of the other Named Executive Officers for 2007 over 2006 levels.

Bonuses

Annual Incentive Bonus Annual bonus compensation is based upon achieving preset annual incentive goals in multiple overlapping arenas – corporate, regional, business unit or department and individual performance. The Named Executive Officers were assigned a target annual incentive award expressed as a percent of salary. Actual awards to be paid were interpolated from zero to two times target, depending upon achieving the annual performance goals. Performance goals include, but are not limited to, ordinary share performance relative to our comparable peer group described above, revenue and earnings growth, investment management results, return on shareholder equity and other key financial and operational measures. Due to our performance in 2006 as well as other factors including the establishment of the other bonus programs described below, none of the executive officers, including the Named Executive Officers, received an Annual Incentive Bonus.

Guaranteed Minimum Annual Incentive Bonuses Several of our Named Executive Officers are entitled to a guaranteed minimum annual incentive bonus pursuant to the terms of their employment agreements. Guaranteed minimum annual incentive bonuses are used in our effort to attract and retain our key executive officers. The following Named Executive Officers received Guaranteed Contractual Bonuses on February 28, 2007 for fiscal year 2006:

Senior Executive Success Plan In August 2006, due to market conditions, our performance, as well as other factors, the Board concluded that pursuing a sale of the Company or a transaction in which we would raise substantial additional capital were the best strategic alternatives for us and in the best interests of our shareholders. In October 2006, the Board approved a Senior Executive Success Plan whose purpose is to (i) retain essential personnel through the transition period relating to the proposed sale or equity investment in our company and (ii) create an incentive to obtain the best possible transaction for shareholders. Participation in the plan is limited to certain executive officers, each of whom will receive guaranteed retention payments to remain with us through the consummation of a transaction. The below Named Executive Officers are participants and will receive the payments listed below to remain with us through the consummation of a transaction. On November 26, 2006, we executed a Securities Purchase Agreement with SRGL Acquisition, LLC, an affiliate of Cerberus Capital Management, L.P., and MassMutual Capital Partners LLC (collectively the ‘‘Investors’’) whereby the Investors will purchase a total of 1,000,000 of our newly issued convertible shares for a total purchase price of $600 million. To the extent this transaction is consummated, the following Named Executive Officers, will receive the guaranteed retention payments listed in the below chart.


				Additional Payments Based on Sales Price
	Guaranteed Retention Payment
Executive	Guaranteed Retention Payment
Paul Goldean		$	300,000		$	0
David Howell		$	200,000		$	0
Dean Miller		$	200,000		$	0
Cliff Wagner		$	200,000		$	0

In addition to the guaranteed payments described above, each of the above Named Executive Officers had the opportunity to receive additional payments to the extent that our sales price in any transaction exceeded $12 per share, with the highest payments occurring at prices in excess of $15 per

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share. Because the effective purchase price of the above described convertible share sale transaction is $4 per share, we will not make any payment to the executive officers under the plan, except for the guaranteed retention payments.

If any of the above Named Executive Officers terminate their employment with us prior to the consummation of a transaction, such officer will forfeit his right to any payments under the plan. The Named Executive Officers will be entitled to payments under the plan 90 days after the consummation of a transaction unless such executive officer is terminated by us for cause or due to resignation by the executive officer without good reason prior to the payment date, in which case the payment will be forfeited.

Severance and Change In Control Benefits

As part of our effort to attract and retain the executives necessary to lead us to achieve our strategic objective of increased shareholder value, we have executed an employment agreement with each of our Named Executive Officers. Each employment agreement includes provisions that provide the executive certain severance and change in control payments. We believe these provisions attract talent and provide the executive with a level of stability that aids in our retention efforts. Generally, our employment agreements provide severance payments that include lump sum payments to our Named Executive Officers if they are terminated by us without cause or if they terminate their employment agreements for good reason (see the discussion of the employment agreements following the Grant of Plan-Based Awards Table for an explanation of these terms). Our employment agreements also typically include change in control payments that generally provide our Named Executive Officers with lump sum payments if they are terminated in connection with a change in control. Each of the Named Executive Officer employment agreements includes a provision that provides that if a change in control occurs, the executive is due a change in control payment if he is terminated by us without cause or he leaves us for good reason in connection with the change in control. The employment agreements further provide that if the executive is terminated by us without cause or terminates his employment for good reason, either in connection with a change in control or not, we shall provide the executive with health insurance, life insurance, and other medical benefits substantially similar to what the executive was receiving prior to the termination, for a period of 12 months. Mr. McCormick’s employment agreement further provides that he is due a change in control payment even if he leaves us voluntarily in connection with the change in control.

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The payments the Named Executive Officers will receive under various scenarios are summarized in the below chart:

Termination not in connection with
a Change in Control⁽¹⁾

Termination in connection with
a Change in Control⁽¹⁾

Named
Executive Officer

Employment terminated by us without cause

Employment terminated by executive for
good reason

Employment terminated by us
without cause

Employment terminated by the executive for good reason

Paul Goldean

total cash compensation for the remaining term or for one full year, whichever is greater

300% of full year total cash compensation

Guaranteed Minimum
Annual Incentive Bonus

Dean Miller

Hugh McCormick