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SCOTTISH ANNUITY & LIFE HOLDINGS, LTD.
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SCOTTISH
ANNUITY & LIFE
Investor Presentation
Fourth Quarter 2001
Notice
In connection with the proposed acquisition of World-Wide Holdings Limited,
Scottish Annuity & Life Holdings, Ltd. ("Scottish Annuity") has filed a proxy
with the Securities and Exchange Commission (the "SEC"). WE URGE INVESTORS TO
READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC
BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors may obtain a copy of the
proxy statement and other documents filed by Scottish Annuity free of charge at
the SEC's Web site, http://www.sec.gov or at the SEC's public reference room at
450 Fifth Street, N.W., Washington, D.C. 20549. You can also obtain information
about Scottish Annuity at the company's Web site, the address of which is
http://www.scottishannuity.com. In addition, documents filed by Scottish Annuity
& Life Holdings, Ltd. with the SEC can be obtained by contacting Scottish
Annuity at the following address and telephone number: Scott E. Willkomm,
Scottish Annuity & Life Holdings, Ltd., Crown House, Third Floor, 4 Par-la-Ville
Road, Post Office Box 2939 HM MX, Hamilton HM 12, Bermuda, telephone (441)
298-4364.
This document does not constitute a solicitation by Scottish Annuity or its
board of directors of any approval or action of its shareholders. Scottish
Annuity, its officers, directors and certain other employees of Scottish Annuity
may be soliciting proxies from Scottish Annuity shareholders in favor of the
acquisition and may be deemed to be "participants in the solicitation" under the
rules of the SEC. Information regarding the interests in the solicitation is set
forth in the proxy statement. The proxy statement is now publicly available and
has been disseminated to shareholders.
Corporate Overview
Bermuda-based life insurance specialist
Focused Mission--
- To provide low-cost, life insurance-based risk management solutions
designed to meet the unique financial and operating needs of our
institutional customers throughout the world
Complimentary business lines
- Life Reinsurance
- Wealth Management
Efficient and flexible operating structure
- Holding company chartered in the Cayman Islands
- Operating companies in Bermuda, Cayman Islands, Ireland and the United
States
Publicly traded-- NASDAQ (SCOT)
Total assets of $1.5 billion / shareholders' equity of $258 million
More than 60 employees in Bermuda, Grand Cayman and United States
Competitive Advantages
Exceptional intellectual capital
- Fusion of actuarial, accounting, finance and investment disciplines
- Superior relationships
Flexible corporate and operating structure
- Operating companies licensed in multiple jurisdictions
- Multi-channel organization process
Significant pricing advantage
- Tax efficient corporate structure
- Low cost operating structure-- Institutional focus
- "Clean capital"
Excellent security - highly rated
- "A" Fitch
- "A-" A.M. Best
Life Reinsurance
Life Reinsurance
Traditional Solutions
- Mortality risk transfer
- Fully underwritten, automatic treaties
- New sales and in-force business
- Target top North American life insurers
Financial Solutions
- Annuities and other investment-oriented products
- Acquisition financing
- Surplus relief - capital management
- Target middle-market companies
Market Opportunity
Large and growing market
Consolidation of reinsurers
- Mergers and acquisitions over the past 5 years open opportunities in a
growing market resulting in an increased need for capacity
- Munich-CNA; Swiss-Life Re-M&G; ERC-Phoenix, Swiss Re-Lincoln Re
Demutualization
- Driving balance sheet and earnings management
New market entrants
- Banks and institutional sales - Life sales combined with annuity
- E Commerce - Direct and through aggregators
Barriers to entry
- Limited universe of experienced professionals
- Access to committed capital
Traditional Solutions
Mortality risk transfer
Fully-underwritten automatic treaties
New sales and in force business
Target top 60 North American life insurers
Liability duration: 10+ years
Target ROE: 12 - 15%
In force Volume
Bar Chart: Reflecting Face Amount of In force Volume in $ billions and Number
of Companies Reporting to Scottish
In force Volume Number of Companies Reporting
$ Billions
Mar-00 0 Mar-00 2
Jun-00 1.2 Jun-00 4
Sep-00 3.4 Sep-00 6
Dec-00 12.4 Dec-00 11
Mar-01 16 Mar-01 21
Jun-01 21 Jun-01 24
Sep-01 27 Sep-01 26
Penetration of Top 60 Companies
33% of the top 60 ceding companies (including subsidiaries) are currently
reporting to Scottish
Pie Chart: Target Market - Top 60 Ceding Companies; 33% - Reporting
Financial Solutions
Customized financial risk management solutions
Annuities and other investment-oriented products
Target middle market life companies and non-traditional market participants
(banks, p&c companies, investment companies)
Liability duration -- 3 to 7 years
Target ROE -- 15 to 20%
Target Market
Target market segments
- Small size companies
o ACLI Forum 500; less than $1 billion of assets
o 113 companies
- Medium size companies
o Greater than $1 billion of assets but generally less than $5
billion of assets
o Capital and surplus to liabilities ratio of 3% to 6%
o 209 companies
- Larger size companies
o Greater than $5 billion of assets and generally less than $20
billion of assets
o Approach as opportunity presents
o 24 companies
- Captive Reinsurance
o For companies distributing life insurance annuity products
wanting to participate in underwriting profits of those blocks of
business via reinsurance structure
o Approach as opportunity presents
Wealth Management
Wealth Management Overview
Variable insurance products for high net worth individuals and families
- Deferred variable annuities
- Variable universal life insurance
Used for estate planning and investment purposes
IRC compliant policies for US persons
Competitive advantage - investment flexibility
Low cost, no-load products
Reinsure mortality risk
Fee-based business
Superior persistency
Trends Driving Wealth Management
Substantial and growing high net worth population
Increasing demand for variable insurance products
Substantial international interest
Lack of tax-advantaged investment products
Products Offered
Variable universal life insurance
- U.S. Tax Compliant; issued through:
o Choice of 953(d) or non 953(d) elected company
Deferred variable annuities
- U.S. Tax Compliant
Variable or "unit-linked" life policies for non-US persons
Separate Account Assets
Bar Chart: Displaying Separate Account Assets in $ millions for the period
1995-2001 categorized as Deferred Variable Annuity and Variable
Universal Life
1995 38 million Deferred Variable Annuity
1996 86 million Deferred Variable Annuity
1997 144 million Deferred Variable Annuity
1998 181 million Deferred Variable Annuity
1999 257 million Deferred Variable Annuity
10 million Variable Universal Life
2000 363 million Deferred Variable Annuity
47 million Variable Universal Life
2001 434 million Deferred Variable Annuity
82 million Variable Universal Life
Financial Performance
Financial Highlights - Total Revenues*
Bar Chart: U.S. Millions
1Q 1999: 2.6 Million
2Q 1999: 3.9 Million
3Q 1999: 6.4 Million
4Q 1999: 9.6 Million
1Q 2000: 10.1 Million
2Q 2000: 15.4 Million
3Q 2000: 18.7 Million
4Q 2000: 39.7 Million
1Q 2001: 22.0 Million
2Q 2001: 24.1 Million
3Q 2001: 33.5 Million
* U.S. GAAP
Financial Highlights - Net Income
Bar Chart: U.S. Millions
1Q 1999: 1.6 Million
2Q 1999: 2.2 Million
3Q 1999: 2.3 Million
4Q 1999: 2.8 Million
1Q 2000: 2.0 Million
2Q 2000: 2.4 Million
3Q 2000: 4.5 Million
4Q 2000: 7.0 Million
1Q 2001: 3.7 Million
2Q 2001: 3.9 Million
3Q 2001: 5.5 Million
Financial Highlights - Total Assets
Bar Chart: U.S. Millions
1Q 1999: 262.0 Million - General Account
2Q 1999: 351.9 Million - General Account
3Q 1999: 522.4 Million - General Account
4Q 1999: 256.5 Million - Separate Accounts
600.1 Million - General Account
1Q 2000: 270.1 Million - Separate Accounts
591.6 Million - General Account
2Q 2000: 284.0 Million - Separate Accounts
709.8 Million - General Account
3Q 2000: 405.6 Million - Separate Accounts
729.8 Million - General Account
4Q 2000: 409.7 Million - Separate Accounts
768.8 Million - General Account
1Q 2001: 460.7 Million - Separate Accounts
767.1 Million - General Account
2Q 2001: 520.6 Million - Separate Accounts
729.3 Million - General Account
3Q 2001: 516.5 Million - Separate Accounts
955.8 Million - General Account
Financial Highlights - Shareholders Equity
Bar Chart: U.S. Millions
1Q 1999: 254.7 Million (before FAS115)
251.1 Million (after FAS115)
2Q 1999: 256.0 Million (before FAS115)
247.1 Million (after FAS115)
3Q 1999: 242.4 Million (before FAS115)
232.2 Million (after FAS115)
4Q 1999: 234.3 Million (before FAS115)
218.7 Million (after FAS115)
1Q 2000: 235.6 Million (before FAS115)
219.7 Million (after FAS115)
2Q 2000: 235.2 Million (before FAS115)
218.7 Million (after FAS115)
3Q 2000: 237.7 Million (before FAS115)
226.4 Million (after FAS115)
4Q 2000: 243.4 Million (before FAS115)
239.6 Million (after FAS115)
1Q 2001: 246.3 Million (before FAS115)
247.8 Million (after FAS115)
2Q 2001: 250.7 Million (before FAS115)
248.6 Million (after FAS115)
3Q 2001: 253.9 Million (before FAS115)
258.1 Million (after FAS115)
World-Wide Reassurance
Transaction Summary
Announced August 6, 2001
World-Wide is an international life reinsurer domiciled in the United Kingdom
Expected to close December 2001
Stock for stock transaction resulting in Pacific Life becoming largest
shareholder of Scottish Holdings Transaction Rationale
Transaction Rationale
Presence in niche markets in developed countries and broader life reinsurance
markets in developing markets
High growth potential
Strong client franchise
Management expertise
Primary short-term business with an average term of two years. Short duration
risks are complimentary to and a good balance with Scottish Holdings'
longer-term risk profile
Geographic Breakdown of Business
Map: World-Wide Holdings Limited, Old Bank House, Thames Street, Windsor
United Kingdom: 14% of 2001E premium income
AUA book of business: 20% of 2001E premium income
United States: 9% of 2001E premium income
Pacific Life: 3% of 2001E premium income
Latin America: 4% of 2001E premium income
Eastern Europe: 2% of 2001E premium income
Mediterranean: 1.1% of 2001E premium income
Maghreb: 2% of 2001E premium income
Middle East: 22% of 2001E premium income
Far East: 11% of 2001E premium income
Transaction Structure
Purchase price of $78 million in SCOT shares
Shares to be issued determined based on average of SCOT stock price 20 trading
days beginning 25 days prior to closing
Number of shares issued floats if SCOT share price between $13.00 and $21.00
per share
Pacific Life to take up to $13 million dividend from WW prior to closing
Cash cures 24.9% maximum share ownership
World-Wide will become sub of Scottish Annuity & Life Holdings, Ltd.
Board will be expanded to 9, with Pacific Life receiving 2 seats
Scheduled closing - late December 2001 Shareholder Approvals
Shareholder Approvals
Extraordinary General Meeting on December 14, 2001
Necessary to complete World-Wide transaction
Proposals
- Approve acquisition of World-Wide from Pacific Life
- Amend Memorandum of Association to permit Company to own World-Wide
and other non-Cayman Islands insurance and reinsurance companies
- Amend Articles of Association to permit Pacific Life to own shares of
the Company in excess of 9.9% but less than 24.9%
- Adopt 2001 Stock Option Plan