Earnings fell at Scottish Re Group Ltd. in the first quarter, but the company says a securitization deal and a special-purpose vehicle transaction should put it in a position to grow.

Scottish Re, Hamilton, Bermuda, is reporting $14 million in net income for the latest quarter on $578 million in revenue, compared with $33 million in net income on $557 million in revenue for the first quarter of 2005.

Late reporting of about $7 million in claims and a flurry of 10 large life claims hurt operating results, Scottish Re says.

Usually, Scottish Re receives only 1 large life claim per month, the company says.

But Scottish Re says it has financed its responsibility for a block of 1.7 million policies acquired from a unit of ING Groep N.V., Amsterdam, by selling $2.1 billion in 30-year notes and subordinated notes to investors.

Scottish Re made the deal because new state laws and regulations based on the Regulation XXX model have increased reserve requirements for level-premium term life insurance policies.

The securitization deal is the third Scottish Re has completed, Scottish Re says.

“A growing number of investors are embracing this asset class,” Michael Baumstein, a senior vice president at Scottish Re’s capital markets unit, says in a statement about the securitization deal. “We expect this trend to continue as more transactions are brought to the market.”

Scottish Re says the securitization deal was structured in such a way that a public Irish company, Ballantyne Re, will bear all responsibility for paying off the notes involved in the deal. Because the investors cannot go after Scottish Re, 2 major rating agencies will exclude Ballantyne Re debt from Scottish Re’s financial leverage ratios, Scottish Re says.

In a related deal, Scottish Re says it has arranged to receive up to $155 million of payments from Tartan Capital Ltd., a special purpose vehicle, if mortality proves to be much higher than expected.

Scottish Re also said Glenn Schafer, the former chief financial officer of Pacific Life Insurance Company, Newport Beach, Calif., is succeeding Michael French as chairman.

French, who has been chairman since 2000, will stay on the Scottish Re board, Scottish Re says.

Schafer has served on the Scottish Re board for all but 1 year since the end of 2001. He has a bachelor’s degree in accounting from Michigan State University and a master’s degree in finance from the University of Detroit. He holds the Fellow, Life Management Institute, professional designation.