Poor mortality figures led to a sharp drop in second-quarter earnings at Scottish Re Group Ltd.[@@]

Scottish Re, Hamilton, Bermuda, is reporting $1.6 million in net income for the second quarter on $504 million in revenue, compared with $29 million in net income on $267 million in revenue for the second quarter of 2004.

Higher than expected death rates among insureds cut operating income by about $11 million, Scottish Re says.

“We are disappointed by the results in the quarter,” Scottish Re President Scott Willkomm says in a statement accompanying the company’s earnings release. “Unfortunately, a greater than expected number of large claims in North America caused us to miss our earnings expectations for the quarter.”

Andrew Kligerman, an analyst at UBS Securities L.L.C., New York, says he remains concerned not only about the company’s mortality figures but also about acquisition pricing.

In addition, “reporting continues to be an issue,” Kligerman writes.

He notes that Scottish Re had to reclassify benefits and acquisition costs for one transaction.