NU Online News Service, Nov. 20, 8:58 a.m. – Annuity & Life Re (Holdings) Ltd., Hamilton, Bermuda, says it will be reporting a net loss of up to $20 million for the third quarter and restating its financial statements for 2000, 2001 and the first half of 2002.
The 4-year-old reinsurer, which reported earlier that it has been talking to the staff of the U.S. Securities and Exchange Commission about its accounting, says it will be changing the past financial statements to reflect the fact that some of its annuity reinsurance contracts contain what appear to be embedded derivatives.
The company says it will also reclassify the $19.5 million reserve component of a $33 million charge taken in the fourth quarter of 2001 in connection with minimum interest guarantees on its largest annuity reinsurance contract as a reduction of its carried balance for deferred acquisition costs.
Annuity & Life will also be making small changes to its 2000 statements, and it will be making changes to its first-quarter 2002 and second-quarter 2002 statements, the company says.
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The third-quarter net loss will include a $7.5 million non-cash charge related to derivatives embedded in annuity reinsurance agreements and a $7.8 million reserve for variable annuity contract reserves, the company says.
Annuity & Life has filed a report with the SEC that gives details about the large annuity reinsurance contract and other reinsurance arrangements on its books.