A top executive at Scottish Re Group Ltd. says company operations performed reasonably well during the second quarter.
Scottish Re, Hamilton, Bermuda, is reporting a net loss of $124 million for the second quarter on $594 million in revenue, compared with $1.6 million in net income on $502 million in revenue for the second quarter of 2005.
“We are very disappointed with the results,” Paul Goldean, Scottish Re’s interim chief executive, says in a statement.
But “we believe that the core fundamentals of the business are sound,” Goldean says. “In fact, our mortality experience for the quarter was in line with expectations.”
One factor affecting net results was an $89 million tax expense. The tax expense was related to a “valuation allowance established on deferred tax assets,” Scottish Re says.
“The valuation allowance resulted from revised statutory and tax projections of the company combined with a reassessment of certain tax planning strategies.”
Scottish Re also adjusted external reserve and external retrocession arrangements by $21 million to reflect improvements in retrocession performance estimates, and it cut deferred acquisition costs by $13 million due to higher-than-expected lapses on some fixed annuity treaties, the company says.
Scottish Re executives repeated earlier assertions that the company is well-capitalized and has enough cash and easy-to-liquidate assets to meet near-term needs.
In related news, Scottish Re has promoted Clifford Wagner, who has been the company’s chief actuary, to chief executive of the company’s North American business.
Wagner succeeds Seth Vance, who recently resigned, Scottish Re says.
Wagner has a bachelor’s degree in actuarial mathematics from the University of Wisconsin, Madison. He is a Fellow of the Society of Actuaries, and he holds the Chartered Life Underwriter, Chartered Financial Consultant and Fellow of the Life Management Institute professional designations.