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."
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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
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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.
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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
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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
========================= =========================
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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
=================== ==================
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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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