Scottish Re Group Limited Announces Operating Results for the Second Quarter Ended June 30, 2007

Business Wire, August 14, 2007

HAMILTON, Bermuda -- After a five day extension resulting from last week's Form 12b-25 filing, Scottish Re Group Limited (NYSE:SCT) today reported that net income available to ordinary shareholders for the three months ended June 30, 2007 was $99.5 million, or $0.63 per diluted ordinary share, as compared to a net loss available to ordinary shareholders of $123.9 million, or $2.31 per diluted ordinary share, for the prior year period. Net income available to ordinary shareholders for the six months ended June 30, 2007 was $64.7 million, or $0.58 per diluted ordinary share, as compared to a net loss available to ordinary shareholders of $112.3 million, or $2.10 per diluted ordinary share for the prior year period.

Net operating earnings available to ordinary shareholders for the three months ended June 30, 2007 was $98.2 million, or $0.62 per diluted ordinary share, as compared to a net operating loss of $130.3 million, or $2.43 per diluted ordinary share, for the prior year period. Net operating earnings available to ordinary shareholders for the six months ended June 30, 2007 was $62.3 million, or $0.56 per diluted ordinary share, as compared to a net operating loss of $116.0 million, or $2.17 per diluted ordinary share, for the prior year period.

Included in net income available to ordinary shareholders and net operating earnings for the three months ended June 30, 2007 is a significant one-time tax benefit. This benefit resulted from the interaction between the release of a previously recorded valuation allowance following the redomestication of Orkney Re, Inc. and Section 382 of the Internal Revenue Code restrictions on the future deduction of net operating losses incurred prior to the change-in-control.

Excluding the one-time tax benefit, we reported a pre-tax operating loss of $52.9 million for the three months ended June 30, 2007 as compared to a pre-tax operating loss of $28.5 million for the prior year period. The pre-tax operating loss increased over the prior year period primarily due to expenses incurred in the current quarter related to the change-in-control. As in the first quarter of 2007, we continue to report pre-tax operating losses due to the impact our underlying GAAP valuation models have on profit emergence in our North America traditional life reinsurance business, the impact of our current financial strength ratings on the level of new business production and collateral financing costs, and the costs of penetrating certain international markets.

Despite the second quarter pre-tax operating loss, we made significant progress on several fronts. New business production of $5.8 billion in our North America segment was higher than planned and, despite our financial strength ratings, we won a number of new treaties and incurred no treaty recaptures. Mortality experience in our North America segment was favorable to plan for the second consecutive quarter. We also exited our Middle Eastern business through a retrocession arrangement with Arab Insurance Group because that business did not meet our strategic objectives. Additionally, we initiated the first phase of our restructuring program. We incurred $20.3 million of restructuring expenses during the current quarter and expect to incur an additional $6.0 million of restructuring expenses in the second half of 2007.

Paul Goldean, Chief Executive Officer of Scottish Re Group Limited, commented, "Following the completion of the equity investment transaction with affiliates of MassMutual Capital Partners and Cerberus Capital Management on May 7, 2007, we have taken the first steps towards re-establishing our position as a leading global life reinsurance company. We initiated a series of process improvement initiatives across the Company focused on strengthening our financial, risk management and operational controls."

"Our new Board of Directors was elected and met earlier this month. During this meeting, I resigned from the Board of Directors and George Zippel, our incoming Chief Executive Officer effective tomorrow, was elected to the Board. As planned, a number of key executives have left the organization. We are actively recruiting their replacements and expect to make further organizational changes in the coming quarter."

Mr. Goldean concluded, "We have also undertaken a detailed review of our non-prime investment exposure which includes $2.1 billion of subprime residential Asset Backed Securities and an additional $1.0 billion of Alt-A Residential Mortgage Backed Securities. We are working actively with our third party investment managers to further evaluate and proactively manage our subprime and Alt-A exposures. Additional disclosure of our subprime and Alt-A exposures have been made available in our Form 10-Q for the three months ended June 30, 2007."

Other Financial Highlights

Total revenues for the three months ended June 30, 2007 increased 3% to $612.7 million from $593.6 million for the prior year period. Excluding realized gains and losses and the change in value of embedded derivatives, total revenues for the three months ended June 30, 2007 increased 2% to $611.4 million from $597.6 million for the prior year period. Total revenues for the six months ended June 30, 2007 increased 4% to $1,218.4 million from $1,171.9 million for the prior year period. Excluding realized gains and losses and the change in value of embedded derivatives, total revenues for the six months ended June 30, 2007 increased 3% to $1,215.9 million from $1,179.3 million for the prior year period.