FORM 11-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 2004
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Transition period from ________ to
Commission File Number 001-16855
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
SCOTTISH HOLDINGS, INC. 401(K) AND PROFIT SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
SCOTTISH RE GROUP LIMITED
Crown House, Third Floor
4 Par-la-Ville Road
Hamilton HM12, Bermuda
SCOTTISH HOLDINGS, INC. 401(K) AND PROFIT SHARING PLAN
INDEX
FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------
Page
Statements of Net Assets Available for Benefits,
December 31, 2004 and 2003 3
Statements of Changes in Net Assets Available for Benefits,
Years Ended December 31, 2004 and 2003 4
Notes to Financial Statements 5
SUPPLEMENTAL SCHEDULE (UNAUDITED)
---------------------------------
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2004 9
All other schedules required by the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income and Security
Act of 1974 are omitted because they are not applicable or not required.
2
SCOTTISH HOLDINGS, INC. 401(K) AND PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS (UNAUDITED)
DECEMBER 31, 2004 AND 2003
2004 2003
---------------------------
Assets
Mutual funds $3,604,645 $2,444,914
Common stock 430,924 525,963
Money market investments 599,056 470,625
Participant loans receivable 46,980 22,491
---------------------------
Total Net Assets Available for Benefits $4,681,605 $3,463,993
===========================
See accompanying notes to financial statements
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SCOTTISH HOLDINGS, INC. 401(K) AND PROFIT SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (UNAUDITED)
YEARS ENDED DECEMBER 31, 2004 AND 2003
2004 2003
----------------------------
Additions to Assets Attributed to:
Contributions
Employer $565,406 $481,893
Participant 565,406 481,893
Rollover 90,182 80,412
----------------------------
Total contributions 1,220,994 1,044,198
Investment Income
Net appreciation in fair value of
investments 358,600 485,149
Interest and dividend income 91,011 35,394
----------------------------
Total investment income 449,611 520,543
----------------------------
Total income 1,670,605 1,564,741
Deductions to Assets Attributed to:
Benefits paid to participants 450,392 128,018
Loan defaults 2,601 1,938
----------------------------
Total deductions 452,993 129,956
----------------------------
Net Increase in Assets Available for
Benefits During the Year 1,217,612 1,434,785
Net Assets Available for Benefits at
Beginning of Year 3,463,993 2,029,208
----------------------------
Net Assets Available for Benefits at
End of Year $4,681,605 $3,463,993
============================
See accompanying notes to financial statements.
4
SCOTTISH HOLDINGS, INC. 401(K) AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
YEARS ENDED DECEMBER 31, 2004 and 2003
1. Summary of Significant Accounting Policies
Basis of Presentation The financial statements of Scottish Holdings, Inc.
401(k) and Profit Sharing Plan (the "Plan") are prepared on an accrual basis in
accordance with generally accepted accounting principles.
Use of Estimates In preparing financial statements, management makes informed
judgments and estimates that affect the reported amounts of assets and
liabilities and changes therein. Actual results may differ from these estimates.
The Plan utilizes various investments. Investment securities, in general, are
exposed to various risks, such as interest rate, credit and overall market
volatility. Due to the risk associated with certain investments securities, it
is reasonably possible that changes in the value of the investment securities
will occur in the near term and such amounts could materially affect the amounts
reported in the financial statements.
Payment of Benefits Benefits to participants ("Participants") of the Plan are
recorded when due.
Investments The Plan's investments are valued at fair value. Fair value of
common stock, mutual funds and money market investments is based on quoted
market prices on the last day of the year. Participant loans receivable are
valued at outstanding principal balance, which approximates fair value.
Security transactions are recorded on a trade-date basis. Dividends are recorded
on the ex-dividend date. Interest is accrued as earned.
The Plan presents in the statements of changes in assets available for benefits,
the net appreciation (depreciation) in the fair value of investments which
consists of realized gains or losses and the unrealized appreciation
(depreciation) on those investments.
2. Description of the Plan
The following is a brief summary of the various provisions on the Plan.
Participants should refer to the Plan for a complete description on the Plan's
provisions.
The financial statements are prepared in accordance with the Employee Retirement
Income Security Act of 1974 ("ERISA"). In accordance with ERISA, such financial
statements for 2004 and 2003 are unaudited.
General The Plan is a defined contribution plan that covers all employees,
with certain exceptions, of Scottish Holdings, Inc. (the "Company") and related
companies that adopt this Plan. Eligibility for participation in the Plan is
automatic on the first day of the month on or after the date one hour of service
is completed with the Company or related companies that adopt this plan.
Contributions Each year, participants may contribute up to 7.5% of annual
compensation, as defined by the Plan. The maximum dollar tax deductible amount
that can be contributed by participant is limited to $13,000 for 2004 and
$12,000 for 2003. Participants may also contribute amounts representing rollover
distributions from other qualified plans. The Company makes qualified matching
contributions of 100% of the first 4% of participant contributions. The Company
will make matching contributions equal to 100% of the participant contributions
that are over 4% but not over 7.5% of the participant's contributions.
Additionally, profit sharing contributions may be made at the discretion of
Scottish Re Group Limited's Compensation Committee. No discretionary profit
sharing contributions were made in 2004 or 2003. Forfeited nonvested amounts are
used to reduce future Company contributions.
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SCOTTISH HOLDINGS, INC. 401(K) AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
YEARS ENDED DECEMBER 31, 2004 and 2003
2. Description of the Plan (Continued)
Participant Accounts Each participant's account is credited with the
participant's contribution and allocations of the Company's contribution and
Plan earnings. Allocations are based on participant account balances. The
benefit to which a participant in entitled is the benefit that can be provided
from the participant's vested account balance.
A participant age 50 or older may elect to contribute additional elective
catch-up contributions to the Plan. The additional amounts may be contributed
regardless of any other limitations on the amount participants may contribute to
the Plan. The maximum catch-up contribution that can be made in 2004 and 2003
was $3,000 and $2,000 respectively.
Vesting Participants are immediately vested in their contributions plus
actual earnings thereon. The Company's qualified matching contributions plus
actual earnings thereon are 100% vested when made. Matching and profit sharing
contributions plus actual earnings thereon vest based on years of credited
service. The Company's matching contributions will be 100% vested in three
years. Profit sharing contributions will be 100% vested in five years.
Administrative Expenses All brokerage fees, trustee fees and other expenses
incident to the administration of the Plan are paid by the Company.
Participant Loans Participants may borrow up to 50% of their vested account
balance, borrowing a maximum of $50,000. Interest charged is at a commercially
reasonable rate. The interest charged for 2004 and 2003 ranged from 5% to 6%.
Rollovers At the discretion of the Plan Administrator, rollovers from
qualified retirement plans will be accepted. Rollovers from individual
retirement accounts and individual retirement annuities are not accepted.
Benefits Benefits payable to a participant as a result of death, disability
or retirement will constitute the participant's vested account balance. If
employment is terminated prior to death, disability or retirement, the
participant will receive a distribution of the vested portion of their account
balance and the non-vested portion will be forfeited. Hardship withdrawals are
available for certain qualified expenses.
3. Party-In-Interest Transactions
All of the common stock investments as of December 31, 2004 and 2003 are shares
of Scottish Re Group Limited common stock. These transactions represent
investments in the ultimate parent of the Company, and, therefore, qualify as
party-in-interest transactions. The net assets available for benefits in
Scottish Re Group Limited common stock were $430,924 and $525,963 as of December
31, 2004 and 2003 respectively.
4. Tax Status
The Plan received an Internal Revenue Service opinion letter dated November 5,
2003 which indicates that the Plan as designed as the date of the letter is in
compliance with applicable requirements of the Internal Revenue Code (the
"IRC"). The Plan Administrator believes the Plan is currently designed and being
operated in compliance with the applicable requirements of the IRC. Therefore,
no provision for income taxes has been included in the Plan's financial
statements.
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SCOTTISH HOLDINGS, INC. 401(K) AND PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
YEARS ENDED DECEMBER 31, 2004 and 2003
5. Plan Termination
Although the Company has not expressed any intent to do so, the Company reserves
the right to change, amend or discontinue the Plan at any time, subject to the
provisions of ERISA. In the event of discontinuance of the Plan, participants
will become 100% vested in their accounts.
6. Investments
Fair values of investments held as of December 31, 2004 and 2003 are summarized
in the following tables. Investments that represent 5% or more of the Plan's net
assets and investments with companies who are known to be a party-in-interest to
the Plan are separately identified.
2004 2003
--------------------------------
Mutual Funds
AIM Aggressive Growth Fund Class A -- $246,975**
AIM Constellation Fund Income
Class A -- 288,898**
Alliance Bernstein Global Strategic
Income Fund $138,677** 154,906**
American Funds Growth Fund of
America Class F 412,817** --
Columbia Acorn Fund Class A 401,206** 241,156**
Davis New York Venture Fund Class A 580,765** 397,829**
Fidelity Advisor Mid Cap Fund
Class A 403,423** --
Ft Templeton Foreign A 406,913** 208,646**
Janus Advisor Flexible Income Fund 326,787** 295,587**
Janus Advisor Balanced Fund 591,030** 418,770**
SSGA S&P 500 Index Fund 343,027** 192,147**
--------------------------------
Total Mutual Funds 2,444,914
3,604,645
Scottish Re Group Limited Common Stock* 430,924** 525,963**
Money Market Portfolio 599,056** 470,625**
Participant Loans Receivable 46,980 22,491
--------------------------------
Total Investments $4,681,605 $3,463,993
================================
* Party-in-interest to the Plan.
** Represents in excess of 5% of Plan's net assets.
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SUPPLEMENTAL SCHEDULE
8
SCOTTISH HOLDINGS, INC. 401(K) AND PROFIT SHARING PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2004
Identity of Issue/ Description Shares/ Fair Market
Units Value
- --------------------------------------------------------------------------------
MUTUAL FUNDS
Alliance Bernstein Global Strategic
Income Fund 15,723 $138,677
American Funds Growth Fund of America
Class F 5,155 412,817
Columbia Acorn Fund Class A 15,473 401,206
Davis New York Venture Fund Class A 18,924 580,765
Fidelity Advisor Mid Cap Fund Class A 16,098 403,423
Ft Templeton Foreign A 33,083 406,913
Janus Advisor Flexible Income Fund 26,590 326,787
Janus Advisor Balanced Fund 23,482 591,030
SSGA S&P 500 Index Fund 17,177 343,027
--------------
TOTAL MUTUAL FUNDS 3,604,645
Scottish Re Group Limited Common Stock* 16,638 430,924
Money Market Portfolio n /a 599,056
Participant Loans Receivable (interest
rates range from 5% to 6%) n /a 46,980
--------------
TOTAL INVESTMENTS $ 4,681,605
==============
* Party-in-interest to the Plan.
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Signatures
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
hereunto duly authorized.
SCOTTISH HOLDINGS, INC. 401(K) AND PROFIT
SHARING PLAN
Date July 18, 2005 /s/ Elizabeth Murphy
------------------------- ---------------------------------------------
Name: Elizabeth Murphy
Title: Trustee
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