A life reinsurer says it turned a profit in the second quarter but may have significant exposure to the turmoil in the mortgage-backed securities market.

Scottish Re Group Ltd., Hamilton, Bermuda, is reporting $103 million in net income for the latest quarter on $613 million in revenue, up from a net loss of $122 million on $593 million in revenue for the second quarter of 2006.

Scottish Re has been struggling in recent years because of accounting and underwriting problems.

The company recently obtained $600 million in capital from investment entities linked to Massachusetts Mutual Life Insurance Company, Springfield, Mass., and a private equity firm.

Big, one-time tax benefits helped Scottish Re post a net profit for the second quarter, but mortality experience was good in North America, the company says.

Despite recent uncertainty about the company’s finances, Scottish Re suffered no treaty recaptures during the quarter and even managed to win a number of new treaties, the company says.

Paul Goldean, Scottish Re’s outgoing chief executive officer, notes in the company’s earnings release that Scottish Re also has started an effort to revamp its operations and its management team.

But Goldean also notes that the company is undertaking a detailed review of its “non-prime investment exposure.”

Scottish Re’s $11 billion investment portfolio includes $2.1 billion in subprime asset-backed securities and $1 billion in Alt-A residential mortgage-backed securities, Goldean says.

“We are working actively with our third party investment managers to further evaluate and proactively manage our subprime and Alt-A exposures,” Goldean says.

Scottish Re’s second-quarter financial data supplement appears to show that ratings of the assets in the company’s investment portfolio were about the same at the end of the latest quarter as they were at the end of the second quarter of 2006.

The percentage of the portfolio invested in AA-rated securities has increased to 24%, from 18%, while the percentage invested in securities rated BB and below fell to 13%, from 16%.

The percentage of the portfolio invested in mortgages-backed securities and other asset-backed securities increased to 52%, from 46%, while the percentage invested in corporate securities, U.S. Treasury securities and U.S. government agency obligations fell to about 36%, from 39%.