Scottish Re Group Ltd, formerly Scottish Annuity & Life Re, announced yesterday that its profits for 2003 had dropped by 16 percent to $27.3 million, despite a ?disappointing? third quarter.

?With this earnings report, we complete our fifth year in the life reinsurance business on a favourable note,? said Michael French, chairman and chief executive officer of Scottish Re ?Clearly, the company has recovered from a disappointing third quarter and is exceptionally well positioned to deliver earnings growth, book value per share growth and expanding returns on equity consistent with our long-term plans to build value for all shareholders.?

The company has changed its focus - and its name - and moved away from life insurance to focus on reinsurance. It reported net income of $32.5 million in 2002.

In its year end and fourth quarter results issued yesterday morning, the company said that net income for the fourth quarter, including the results of the discontinued Luxembourg operations and the cumulative effect of the change in accounting principle amounted to $10.5 million, compared to $12.7 million or $0.45 per diluted share for the prior year period. In the third quarter of 2003, net income from continuing operations fell to $1.8 million after taking a $12.5 million charge to account for revised reporting of death claims by a ceding company client in connection with two annuity reinsurance treaties.

?Over the past five years we have successfully built a leading global life reinsurance specialist,? said Scott Willkomm, president of Scottish Re Group Ltd.

?We have the people, the knowledge and the financial resources to capitalise on favourable market opportunities to grow our business and produce superior risk adjusted returns.?

The company also said that a change in its accounting procedure led to a loss, after tax and after related amortisation of deferred acquisition costs of $19.5 million. It said that this has been recorded as a cumulative effect of change in accounting principle in its consolidated statement of income for the quarter and year and the change in fair value of the derivative for the quarter was a net gain of $13.9 million.