Annuity and Life Re (Holdings) Ltd. and Scottish Re Group Ltd. continued to try to regroup during the third quarter.

Annuity and Life Re, Hamilton, Bermuda, began running into accounting problems and reporting losses a few years back, and now it has transferred most of its reinsurance business to other companies.

That company is reporting a $205,690 net loss for the latest quarter, compared with a net loss of $2.6 million for the third quarter of 2005.

Scottish Re, Hamilton, the second largest U.S. life reinsurer, is still in operation, but it also has run into turbulence and is soliciting bids from prospective acquirers.

Scottish Re is reporting a $30 million net loss on $611 million in revenue, compared with $32 million in net income on $564 million in revenue for the third quarter of 2005.

“Excluding the expected one-off expenses related to our current situation and the unusually high tax expense for the quarter, the third quarter results reflect an underlying core profitability that is within our expectations,” Scottish Re Chief Executive Paul Goldean says.

Goldean says Scottish Re cannot promise the company will clinch a deal with an acquirer or investor, or that any deal price will be higher than the company’s Nov. 9 share price.

“However, we do expect the process to conclude within the next several weeks,” Goldean says.

Andrew Kligerman, a securities analyst at UBS Investment Research, New York, and Saul Martinez, a securities analyst at Bear, Stearns & Company Inc., New York, have published research notes suggesting that Scottish Re seems to be less confident about completing negotiations for a deal than it was a few weeks ago.

Annuity and Life Re notes in its earnings release that it is tied up in arbitration with Transamerica Occidental Life Insurance Company, Los Angeles, a unit of AEGON N.V., The Hague, Netherlands, and also is involved in talks with Scottish Re about problems with a reinsurance arrangement that Annuity and Life Re sold to Scottish Re.

Transamerica wants to require Annuity and Life Re to provide $30 million in security before proceeding with arbitration, Annuity and Life Re says.

Annuity and Life Re is opposing that request, because the requirement would leave the company with just $2 million in unencumbered capital, the company says.

Scottish Re has told Annuity and Life Re that it may have paid Annuity and Life about $10 million too much in premiums and failed to bill the company for about $10 million in claims in 2004 and 2005, Annuity and Life Re says.

Scottish Re has not yet backed these assertions with any specific data, Annuity and Life Re says.