Scottish Annuity & Life Holdings, Ltd. which announced earlier this year it was moving its headquarters to Bermuda, has reported an increase of 62 percent in net operating earnings in the last quarter after the company saw its reinsurance sector grow.

Net operating earnings rose to $3.9 million, or $0.24 per diluted share for the quarter ended June 30, 2001 as compared to $2.4 million, or $0.15 per diluted share for the prior year period.

"This quarter's financial report highlights the successful efforts to build our life reinsurance operations," said Michael C. French, Chairman and Chief Executive Officer of Scottish Annuity & Life.

"These results continue to reflect the significant enhancements we have made to our business model, the professional leadership we added to the organisation during 2000 and 2001 and our continuing commitment to building shareholder value."

Net income for the quarter also increased to $3.9 million, or $0.24 per diluted share as compared to $2.4 million, or $0.15 per diluted share for the prior year period.

Net operating earnings for the second quarter of 2001 differ from net income by net realised investment gains and a charge of $406,000 due to the cumulative effect of change in accounting principle.Total revenue for the quarter increased to $24.1 million from $15.4 million for the prior year period, an increase of 56 percent.

The increases were principally driven by the growth in reinsurance premiums earned by the company. Total benefits and expenses increased to $20.0 million for the quarter from $13.5 million, an increase of 48 percent, and to $38.3 million from $21.5 million in the first six months, an increase of 78 percent.

"In the second quarter, our life reinsurance operations reported meaningful premiums, and our actual claims experience was consistent with expected mortality," said Scott E. Willkomm, President of Scottish Annuity & Life. "We expect to demonstrate significant growth in our life reinsurance business during the balance of 2001, and we look forward to completing our acquisition of World-Wide Reassurance and launching our new relationship with Pacific Life before the end of the year."

The company's total assets were $1.2 billion as of June 30, 2001. The investment portfolio, including cash and cash-equivalents, totalled $525.7 million, had an average quality rating of "A+", an effective duration of 3.49 years and a weighted average book yield of 6.88 percent.

This compares with a portfolio balance of $628.8 million, an average quality rating of "AA minus", effective duration of 2.62 years and an average book yield of 7.24 percent as of December 31, 2000.

Scottish Annuity & Life Holdings, Ltd. provides reinsurance of life insurance and annuities and is a direct issuer of customised variable life and annuity products for high net worth individuals.