================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               -------------------

                                    FORM 1O-Q

              [X] Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                  For the quarterly period ended March 31, 2007

              [ ] Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                  For the Transition period from _____ to _____

                        Commission File Number: 001-16855

                            SCOTTISH RE GROUP LIMITED
             (Exact Name of Registrant as Specified in Its Charter)

            Cayman Islands                          98-0362785
   (State or Other Jurisdiction of               (I.R.S. Employer
    Incorporation or Organization)              Identification No.)

                                P.O. Box HM 2939
                            Crown House, Second Floor
                               4 Par-la-Ville Road
                                  Hamilton HMO8
                                     Bermuda
                    (Address of Principal Executive Offices)

                                 Not Applicable
                                   (Zip Code)

                                 (441) 295-4451
             (Registrant's telephone number, including area code)

              (Former name, former address and former fiscal year
                         if changed since last report)

    Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                     Yes /X/  No / /

    Indicate by checkmark whether the registrant is a large accelerated filer,
or a non-accelerated filer. See definition of "accelerated filer" and "large
accelerated filer" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer /X/   Accelerated filer / /   Non-accelerated filer / /

    Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).

                                     Yes / /  No /X/

As of May 9, 2007, the Registrant had 67,995,057 ordinary shares outstanding.

================================================================================


<PAGE>

                                Table of Contents

PART I.   FINANCIAL INFORMATION................................................2

Item 1.   Financial Statements.................................................2

          Consolidated Balance Sheets -- March 31, 2007
               (unaudited) and December 31, 2006...............................2

          Consolidated Statements of Income (Loss) -- Three months
               ended March 31, 2007 and 2006 (unaudited).......................3

          Consolidated Statements of Comprehensive Loss -- Three months
               ended March 31, 2007 and 2006 (unaudited).......................4

          Consolidated Statements of Shareholders' Equity -- Three months
              ended March 31, 2007 and 2006 (unaudited)........................5

          Consolidated Statements of Cash Flows -- Three months ended
               March 31, 2007 and 2006 (unaudited).............................6

          Notes to Consolidated Financial Statements (unaudited)...............7

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...........................................13

Item 3.   Quantitative and Qualitative Disclosures about Market Risk..........33

Item 4.   Controls and Procedures.............................................34

PART II. OTHER INFORMATION....................................................35

Item 1.   Legal Proceedings...................................................35

Item 1A.  Risk Factors........................................................35

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.........35

Item 3.   Defaults upon Senior Securities.....................................35

Item 4.   Submission of Matters to a Vote of Security Holders.................35

Item 5.   Other Information...................................................36

Item 6.   Exhibits............................................................36


                                       1
<PAGE>

                          PART I. FINANCIAL INFORMATION


Item 1. Financial Statements

                            SCOTTISH RE GROUP LIMITED
                           CONSOLIDATED BALANCE SHEETS
      (Expressed in Thousands of United States dollars, except share data)

<TABLE>
<CAPTION>
                                                                   March 31,        December 31,
                                                                     2007              2006
                                                                  (unaudited)        (audited)
                                                                  -----------       -----------
<S>                                                              <C>             <C>
ASSETS
Fixed maturity investments, available for sale, at fair value
   (Amortized cost $8,187,168; 2006 - $8,103,743) ............   $  8,135,873    $  8,065,524
Preferred stock, available for sale, at fair value
   (Cost $114,287; 2006 - $119,721) ..........................        112,009         116,933
Cash and cash equivalents ....................................        692,284         622,756
Other investments ............................................         65,211          65,448
Funds withheld at interest ...................................      1,835,003       1,942,079
                                                                 ------------    ------------
   Total investments .........................................     10,840,380      10,812,740
Accrued interest receivable ..................................         56,879          57,538
Reinsurance balances and risk fees receivable ................        481,022         481,908
Deferred acquisition costs ...................................        610,054         618,737
Amounts recoverable from reinsurers ..........................        545,515         554,589
Present value of in-force business ...........................         48,311          48,779
Other assets .................................................        199,633         178,311
Segregated assets ............................................        683,405         683,470
                                                                 ------------    ------------
   Total assets ..............................................   $ 13,465,199    $ 13,436,072
                                                                 ============    ============

LIABILITIES
Reserves for future policy benefits ..........................   $  3,970,252    $  3,919,901
Interest sensitive contract liabilities ......................      3,305,858       3,399,410
Collateral finance facilities ................................      3,775,519       3,757,435
Accounts payable and other liabilities .......................        166,662          95,260
Reinsurance balances payable .................................        138,119          72,304
Current income tax payable ...................................          4,289              48
Deferred tax liability .......................................        161,328         169,977
Long-term debt ...............................................        129,500         129,500
Segregated liabilities .......................................        683,405         683,470
                                                                 ------------    ------------
Total liabilities ............................................     12,334,932      12,227,305
                                                                 ============    ============

MINORITY INTEREST ............................................          7,716           7,910
MEZZANINE EQUITY .............................................              -         143,665
SHAREHOLDERS' EQUITY
Ordinary shares, par value $0.01 per share:
   Issued and outstanding: 67,995,057 ordinary shares (2006 -
   60,554,104) ...............................................            680             606
Preferred shares, par value $0.01 per share:
   Issued: 5,000,000 shares (2006 - 5,000,000) ................       125,000         125,000
Additional paid-in capital ...................................      1,195,481       1,050,860
Accumulated other comprehensive (loss) income ................        (10,947)            340
Retained deficit .............................................       (187,663)       (119,614)
                                                                 ------------    ------------
   Total shareholders' equity ................................      1,122,551       1,057,192
                                                                 ------------    ------------
Total liabilities, minority interest, mezzanine equity and
   shareholders' equity ......................................   $ 13,465,199    $ 13,436,072
                                                                 ============    ============
</TABLE>

     See Accompanying Notes to Consolidated Financial Statements (unaudited)


                                       2
<PAGE>

                            SCOTTISH RE GROUP LIMITED
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                                   (UNAUDITED)

      (Expressed in Thousands of United States dollars, except share data)


<TABLE>
<CAPTION>
                                                                        Three months ended
                                                                    ---------------------------
                                                                    March 31,         March 31,
                                                                      2007              2006
                                                                    ---------         ---------
<S>                                                              <C>             <C>
Revenues
Premiums earned, net .........................................   $    458,214    $    449,021
Investment income, net .......................................        141,597         129,022
Fee income ...................................................          4,630           3,733
Net realized losses ..........................................         (4,289)        (13,601)
Change in value of embedded derivatives, net .................          5,592          10,146
                                                                 -------------   -------------
   Total revenues ............................................        605,744         578,321
                                                                 -------------   -------------
Benefits and expenses
Claims and other policy benefits .............................        383,583         374,463
Interest credited to interest sensitive contract liabilities .         35,302          42,701
Acquisition costs and other insurance expenses, net ..........         95,107          87,531
Operating expenses ...........................................         34,580          31,092
Collateral finance facilities expense ........................         73,695          31,087
Interest expense .............................................          3,576           4,893
                                                                 -------------   -------------
   Total benefits and expenses ...............................        625,843         571,767
                                                                 -------------   -------------

Income (loss) before income taxes and minority interest ......        (20,099)          6,554
Income tax benefit (expense) .................................        (13,381)          7,457
                                                                 -------------   -------------
Income (loss) before minority interest .......................        (33,480)         14,011
Minority interest ............................................            268            (162)
                                                                 -------------   -------------
Net income (loss) ............................................        (33,212)         13,849
Dividend declared on non-cumulative perpetual preferred shares         (2,266)         (2,266)
                                                                 -------------   -------------
Net income (loss) available to ordinary shareholders .........   $    (35,478)   $     11,583
                                                                 =============   =============

Earnings (loss) per ordinary share - Basic ...................   $      (0.55)   $       0.22
                                                                 =============   =============
Earnings (loss) per ordinary share - Diluted .................   $      (0.55)   $       0.20
                                                                 =============   =============
Dividends declared per ordinary share ........................   $          -    $       0.05
                                                                 =============   =============

Weighted average number of ordinary share outstanding
  Basic ......................................................     64,191,977      53,434,484
                                                                 =============   =============
  Diluted ....................................................     64,191,977      56,532,914
                                                                 =============   =============
</TABLE>

     See Accompanying Notes to Consolidated Financial Statements (unaudited)


                                       3
<PAGE>

                            SCOTTISH RE GROUP LIMITED
                  CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                                   (UNAUDITED)

                (Expressed in Thousands of United States dollars)

                                                           Three months ended
                                                          ----------------------
                                                          March 31,    March 31,
                                                            2007          2006
                                                          ---------    ---------

Net income (loss) ....................................    $(33,212)    $ 13,849
                                                          ---------    ---------
Other comprehensive loss, net of tax:
Unrealized depreciation on investments ...............      (8,959)     (37,457)
Add: reclassification adjustment for net
   realized gains (losses) included in net income ....      (2,868)      (7,670)
                                                          ---------    ---------
Net unrealized appreciation (depreciation) on
   investments net of income tax benefit
   (expense) and deferred acquisition costs of
   $2,216, and $33,807 ...............................     (11,827)     (45,127)
Cumulative translation adjustment ....................         540         (268)
                                                          ---------    ---------
Other comprehensive loss .............................     (11,287)     (45,395)
                                                          ---------    ---------
Comprehensive loss ...................................    $(44,499)    $(31,546)
                                                          =========    =========

     See Accompanying Notes to Consolidated Financial Statements (unaudited)


                                       4
<PAGE>

                            SCOTTISH RE GROUP LIMITED
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   (UNAUDITED)

      (Expressed in Thousands of United States dollars, except share data)

<TABLE>
<CAPTION>
                                                                                     Three months ended
                                                                                 ---------------------------
                                                                                 March 31,         March 31,
                                                                                   2007              2006
                                                                                 ---------         ---------
<S>                                                                           <C>               <C>
Ordinary shares:
   Beginning of period ..................................................       60,554,104        53,391,939
   Issuance to employees on exercise of options and awards ..............              475           263,917
   Issuance to holders of HyCUs on conversion of purchase contracts .....        7,440,478                 -
                                                                              -------------     -------------
    End of period .......................................................       67,995,057        53,655,856
                                                                              =============     =============
Preferred shares:
   Beginning and end of period ..........................................        5,000,000         5,000,000
                                                                              -------------     -------------

Share capital:
Ordinary shares:
   Beginning of period ..................................................     $        606      $        534
   Issuance to employees on exercise of options .........................                -                 3
   Issuance to holders of HyCUs on conversion of purchase contracts .....               74                 -
                                                                              -------------     -------------
   End of period ........................................................              680               537
                                                                              -------------     -------------
Preferred shares:
   Beginning and end of period ..........................................          125,000           125,000
                                                                              -------------     -------------
Additional paid-in capital:
   Beginning of period ..................................................        1,050,860           893,767
   Issuance to employees on exercise of options .........................                -             3,752
   Option and restricted stock unit expense .............................              715             1,996
   Issuance to holders of HyCUs on conversion of purchase contracts .....          143,675                 -
   Other ................................................................              231                 -
                                                                              -------------     -------------
   End of period ........................................................        1,195,481           899,515
                                                                              -------------     -------------

Accumulated other comprehensive loss:
Unrealized depreciation on investments
   Beginning of period ..................................................          (19,624)          (17,879)
   Change in period (net of tax and deferred acquisition costs) .........          (11,827)          (45,127)
                                                                              -------------     -------------
   End of period ........................................................          (31,451)          (63,006)
                                                                              -------------     -------------
Cumulative translation adjustment
   Beginning of period ..................................................           22,826             7,888
   Change in period (net of tax) ........................................              540              (268)
                                                                              -------------     -------------
   End of period ........................................................           23,366             7,620
                                                                              -------------     -------------
Effect of adoption of FAS 158
   Beginning and end of period ..........................................           (2,862)                -
                                                                              -------------     -------------
Total accumulated other comprehensive loss ..............................          (10,947)          (55,386)
                                                                              -------------     -------------

Retained earnings (deficit):
   Beginning of period ..................................................         (119,614)          262,402
   Adoption of FIN 48 on January 1, 2007 ................................          (32,571)                -
   Net income (loss) ....................................................          (33,212)           13,849
   Dividends declared on ordinary shares ................................                -            (2,673)
   Dividends declared on non-cumulative perpetual preferred shares ......           (2,266)           (2,266)
                                                                              -------------     -------------
   End of period ........................................................         (187,663)          271,312
                                                                              -------------     -------------
Total shareholders' equity ..............................................     $  1,122,551      $  1,240,978
                                                                              =============     =============
</TABLE>

     See Accompanying Notes to Consolidated Financial Statements (unaudited)


                                       5
<PAGE>

                            SCOTTISH RE GROUP LIMITED
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                (Expressed in Thousands of United States dollars)


<TABLE>
<CAPTION>
                                                                                     Three months ended
                                                                                 ---------------------------
                                                                                 March 31,         March 31,
                                                                                   2007              2006
                                                                                 ---------         ---------
<S>                                                                            <C>               <C>
Operating activities
Net income (loss) .......................................................      $   (33,212)      $    13,849
Adjustments to reconcile net income (loss) to net cash provided
   by operating activities:
   Net realized losses ..................................................            4,289            13,601
   Change in value of embedded derivatives, net .........................           (5,592)          (10,146)
   Amortization of discount on investments ..............................            3,487             4,067
   Amortization of deferred acquisition costs ...........................           18,109            18,866
   Amortization of present value of in-force business ...................              468               916
   Changes in assets and liabilities:
      Accrued interest receivable .......................................              635            (1,383)
      Reinsurance balances and risk fees receivable .....................           61,395            79,050
      Deferred acquisition costs ........................................          (12,327)          (34,724)
      Deferred tax asset and liability ..................................           (4,024)             (276)
      Other assets and liabilities ......................................          (16,771)            5,542
      Current income tax receivable and payable .........................            4,232            (4,701)
      Reserves for future policy benefits, net of amounts
         recoverable from reinsurers ....................................           41,208           (35,900)
      Interest sensitive contract liabilities, net of funds .............           62,759            36,175
         withheld at interest
      Accounts payable and other liabilities ............................           31,519           (12,270)
      Other .............................................................              455            (3,054)
                                                                               ------------      ------------
   Net cash provided by operating activities ............................          156,630            69,612
                                                                               ------------      ------------

Investing activities
Purchase of fixed maturity investments ..................................         (308,558)       (1,144,900)
Proceeds from sales of fixed maturity investments .......................           56,299           184,417
Proceeds from maturity of fixed maturity investments ....................          159,227           105,673
Purchase of preferred stock investments .................................                -            (4,608)
Proceeds from sales and maturity of preferred stock investments .........            5,136             4,821
Purchase of other investments ...........................................            1,090            (9,616)
Other ...................................................................            1,131            (2,601)
                                                                               ------------      ------------
   Net cash used in investing activities ................................          (85,675)         (866,814)
                                                                               ------------      ------------

Financing activities
Deposits to interest sensitive contract liabilities .....................            2,961           113,521
Withdrawals from interest sensitive contract liabilities ................          (27,544)          (45,264)
Proceeds from issuance of ordinary shares ...............................                -             3,755
Proceeds from issuance to holders of HyCUs on conversion of
   purchase contracts ...................................................            7,338                 -
Proceeds from collateral finance facility liabilities ...................           18,084                 -
Dividends paid on ordinary shares .......................................                -            (2,673)
Dividends paid on perpetual preferred shares ............................           (2,266)           (2,266)
                                                                               ------------      ------------
   Net cash (used in) provided by financing activities ..................           (1,427)           67,073
                                                                               ------------      ------------
Net change in cash and cash equivalents .................................           69,528          (730,129)
Cash and cash equivalents, beginning of period ..........................          622,756         1,420,205
                                                                               ------------      ------------
Cash and cash equivalents, end of period ................................      $   692,284       $   690,076
                                                                               ============      ============
</TABLE>

     See Accompanying Notes to Consolidated Financial Statements (unaudited)


                                       6
<PAGE>

                            SCOTTISH RE GROUP LIMITED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2007
                                   (UNAUDITED)



1.      Basis of presentation

    Accounting Principles -- The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles in the United States of America ("GAAP") and the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The results for the interim period are not necessarily indicative of
the results to be expected for the full year ending December 31, 2007. These
unaudited consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in our 2006
Annual Report on Form 10-K for the year ended December 31, 2006 ("2006 Annual
Report").

    Consolidation -- We consolidate the results of all of our subsidiaries and
all variable interest entities for which we are the primary beneficiary. All
significant inter-company transactions and balances have been eliminated on
consolidation.

    Estimates, Risks and Uncertainties -- The preparation of consolidated
financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported on the consolidated
financial statements and accompanying notes. Actual results could differ
materially from those estimates and assumptions used by management. Our most
significant assumptions are for assumed reinsurance liabilities, premiums
receivable, deferred acquisition costs, valuation of investment impairments and
estimates of the realizability of gross deferred tax assets. We review and
revise these estimates as appropriate. Any adjustments made to these estimates
are reflected in the period the estimates are revised.

    All tabular amounts are reported in thousands of United States dollars,
except share and per share data, or as otherwise noted.

2.      New accounting pronouncements

FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes

    In July 2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"),
"Accounting for Uncertainty in Income Taxes". FIN 48 prescribes detailed
guidance for the financial statement recognition, measurement and disclosure of
uncertain tax positions recognized in an enterprise's financial statements in
accordance with FASB Statement No. 109, "Accounting for Income Taxes". Tax
positions must meet a "more likely than not" recognition threshold at the
effective date to be recognized upon the adoption of FIN 48 and in subsequent
periods. On January 1, 2007, we adopted FIN 48. See Note 5.

FASB Statement No. 157, Fair Value Measurements

    In September 2006, the FASB issued Statement No. 157 ("SFAS No. 157"), "Fair
Value Measurements", which defines fair value, establishes a framework for
measuring fair value under GAAP and expands disclosures about fair value
measurements. We are required to adopt SFAS No. 157 on January 1, 2008 and are
evaluating the implications of SFAS No. 157 on our results of operations and
financial position.

3.      Business segments

    We measure segment performance primarily based on income or loss before
income taxes and minority interest. Our reportable segments are strategic
business units that are primarily segregated by geographic region. We report
segments in accordance with SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related


                                       7
<PAGE>

                            SCOTTISH RE GROUP LIMITED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 MARCH 31, 2007
                                   (UNAUDITED)

3.      Business segments (continued)

Information". Our segments are Life Reinsurance North America, Life Reinsurance
International and Corporate and Other. The segment reporting is as follows:

<TABLE>
<CAPTION>
                                                                         Three months ended March 31, 2007
                                                                   ---------------------------------------------
                                                                      Life Reinsurance
                                                                   -----------------------
                                                                    North                   Corporate
                                                                   America   International  and Other      Total
                                                                   -------   -------------  ---------      -----
<S>                                                               <C>          <C>          <C>          <C>
Premiums earned, net ..........................................   $ 423,371    $  34,843    $       -    $ 458,214
Investment income, net ........................................     137,919        3,043          635      141,597
Fee income ....................................................       3,916            -          714        4,630
Net realized losses ...........................................      (2,405)        (625)      (1,259)      (4,289)
Change in value of embedded derivatives, net ..................       5,592            -            -        5,592
                                                                  ----------   ----------   ----------   ----------
   Total revenues .............................................     568,393       37,261           90      605,744
                                                                  ----------   ----------   ----------   ----------

Claims and other policy benefits ..............................     357,934       25,649            -      383,583
Interest credited to interest sensitive contract liabilities ..      35,302            -            -       35,302
Acquisition costs and other insurance expenses, net ...........      87,223        5,921        1,963       95,107
Operating expenses ............................................      12,258        9,812       12,510       34,580
Collateral finance facilities expense .........................      68,856            -        4,839       73,695
Interest expense ..............................................       3,055            -          521        3,576
                                                                  ----------   ----------   ----------   ----------
   Total benefits and expenses ................................     564,628       41,382       19,833      625,843
                                                                  ----------   ----------   ----------   ----------
Income (loss) before income taxes and minority interest .......   $   3,765    $  (4,121)   $ (19,743)   $ (20,099)
                                                                  ==========   ==========   ==========   ==========


                                                                         Three months ended March 31, 2006
                                                                   ---------------------------------------------
                                                                      Life Reinsurance
                                                                   -----------------------
                                                                    North                   Corporate
                                                                   America   International  and Other      Total
                                                                   -------   -------------  ---------      -----
Premiums earned, net ..........................................   $ 428,918    $  20,103       $    -    $ 449,021
Investment income, net ........................................     123,941        2,989        2,092      129,022
Fee income ....................................................       3,017            -          716        3,733
Net realized gains (losses) ...................................     (13,919)      (1,138)       1,456      (13,601)
Change in value of embedded derivatives, net ..................      10,146            -            -       10,146
                                                                  ----------   ----------   ----------   ----------
  Total revenues ..............................................     552,103       21,954        4,264      578,321
                                                                  ----------   ----------   ----------   ----------

Claims and other policy benefits ..............................     347,280       27,183            -      374,463
Interest credited to interest sensitive contract liabilities ..      42,701            -            -       42,701
Acquisition costs and other insurance expenses, net ...........      84,408        2,817          306       87,531
Operating expenses ............................................      14,592        5,777       10,723       31,092
Collateral finance facilities expense .........................      30,543            -          544       31,087
Interest expense ..............................................       2,562            -        2,331        4,893
                                                                  ----------   ----------   ----------   ----------
  Total benefits and expenses .................................     522,086       35,777       13,904      571,767
                                                                  ----------   ----------   ----------   ----------
Income (loss) before income taxes and minority interest .......   $  30,017    $ (13,823)   $  (9,640)   $   6,554
                                                                  ==========   ==========   ==========   ==========
</TABLE>


                                        8
<PAGE>

                            SCOTTISH RE GROUP LIMITED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 MARCH 31, 2007
                                   (UNAUDITED)

3.      Business segments (continued)

                                             March 31, 2007    December 31, 2006
                                             --------------    -----------------
Assets
Life Reinsurance
   North America...........................  $   12,266,596     $   12,194,291
   International...........................         421,607            431,222
                                             --------------     --------------
Total Life Reinsurance.....................      12,688,203         12,625,513
Corporate and Other........................         776,996            810,559
                                             --------------     --------------
Total......................................  $   13,465,199     $   13,436,072
                                             ==============     ==============


                                       9
<PAGE>

                            SCOTTISH RE GROUP LIMITED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 MARCH 31, 2007
                                   (UNAUDITED)


4.      Earnings per ordinary share

    The following table sets forth the computation of basic and diluted earnings
per ordinary share.

                                                          Three months ended
                                                          -------------------
                                                          March 31,  March 31,
                                                            2007       2006
                                                          ---------  --------
     Numerator:
     Net income (loss) .............................. $   (33,212)  $    13,849
     Dividend declared on non-cumulative
        perpetual preferred shares ..................      (2,266)       (2,266)
                                                      ------------  ------------
     Net income (loss) available to ordinary
        shareholders ................................ $   (35,478)  $    11,583
                                                      ============  ============

     Denominator:
     Denominator for basic earnings per
        ordinary share - weighted average number
        of ordinary shares ..........................  64,191,977    53,434,484
     Effect of dilutive securities
        -- Stock options and restricted stock units .           -     1,221,086
        -- Warrants .................................           -     1,030,301
        -- 4.50% senior convertible notes and
           Hybrid Capital Units .....................           -       847,043
                                                      ------------  ------------
     Denominator for dilutive earnings (loss)
        per ordinary share ..........................  64,191,977    56,532,914
                                                      ============  ============
     Basic earnings (loss) per ordinary share ....... $     (0.55)  $      0.22
                                                      ============  ============
     Diluted earnings (loss) per ordinary share ..... $     (0.55)  $      0.20
                                                      ============  ============


        In accordance with SFAS No. 128, "Earnings Per Share", the exercise of
options and warrants or conversion of convertible securities is not assumed
unless it would reduce earnings per share or increase loss per share.

5.      Income taxes

    Income tax expense in the first quarter ended March 31, 2007 was $13.4
million compared to an income tax benefit of $7.5 million in the same period in
2006. The change in our effective tax rate in the first quarter ended March 31,
2007 compared to the same period in 2006 is primarily related to an $ 11.0
million valuation allowance established in the first quarter of 2007 on deferred
tax assets. The valuation allowance principally relates to current period tax
benefits not being recognized as we can no longer recognize tax benefits for
certain legal entities. In addition, a valuation allowance was established on
deferred tax assets resulting from estimated statutory and tax projections
related to certain legal entities. At the end of the first quarter of 2007, the
remaining gross deferred tax asset is supported principally by the reversal of
deferred tax liabilities within the carry forward period and, to a much lesser
extent, tax planning strategies for which management believes that it is more
likely than not that the deferred tax assets will be utilized in subsequent
periods, although there is a risk that we will need to establish additional
valuation allowances in future quarters.

    On January 1, 2007, we adopted FIN 48. As a result of the implementation of
FIN 48, we recorded a net decrease to our beginning retained earnings of $32.6
million representing a total FIN 48 liability of $78.0 million (excluding
previously recognized liabilities of $6.5 million and including interest and
penalties of $11.1 million)


                                       10
<PAGE>

                            SCOTTISH RE GROUP LIMITED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 MARCH 31, 2007
                                   (UNAUDITED)


5.      Income taxes (continued)

reduced by a $45.4 million reduction of our existing valuation allowance. We
have total unrecognized tax benefits (excluding interest and penalties) of $73.4
million which did not change significantly during the three months ended March
31, 2007. In addition, future changes in the unrecognized tax benefits would
result in a $28.0 million effective tax rate benefit. Our policy for recording
interest and penalties associated with uncertain tax positions is to record such
items as a component of income tax expense (on a go forward basis excluding the
initial amount noted above). We do not reasonably estimate that the unrecognized
tax benefit will change significantly within the next twelve months.

    We file our tax returns as prescribed by the tax laws of the jurisdictions
in which we operate. As of March 31, 2007, we remained subject to examination in
the following major tax jurisdictions for the years indicated below:

          Major Tax Jurisdictions              Open Years
          -----------------------              ----------
          U.S.
             Life Group .................   2001 through 2006
             Non-Life Group .............   2005 through 2006
          Ireland .......................   2002 through 2006
          U.K ...........................   2001 through 2006

    As discussed in Note 12 to the consolidated financial statements in the 2006
Annual Report, at December 31, 2006 we had a valuation allowance of $304.9
million established against our deferred tax assets. We currently provide a
valuation allowance against deferred tax assets when it is more likely than not
that some portion, or all of our deferred tax assets, will not be realized. Our
valuation allowance decreased by approximately $27.3 million during the three
months ended March 31, 2007 to $277.6 million, including the impact of current
quarter activity as described above, the impact from applying FIN 48 and other
adjustments.


6.      Mezzanine equity

    On December 17, 2003 and December 22, 2003, we issued in a public offering
5,750,000 Hybrid Capital Units or HyCUs. The aggregate net proceeds were $141.9
million. Each HyCU consisted of (i) a purchase contract ("purchase contract") to
which the holder was obligated to purchase from us, on February 15, 2007, an
agreed upon number of ordinary shares for a price of $25.00 and (b) a
convertible preferred share with a liquidation preference of $25.00.

    Holders of the convertible preferred shares had the option to allow the
convertible preferred share to be included in the remarketing process and use
the proceeds of the remarketing to settle the purchase contract or elect not to
participate in the remarketing by delivering the requisite amount of cash to
settle the purchase contract.

    On January 25, 2007, we gave notice to holders of the HyCUs that we were
unable to satisfy certain conditions precedent to the remarketing that were
contained in the Remarketing Agreement and, therefore, the remarketing of the
convertible preferred shares had failed. Accordingly, holders of the HyCUs only
had the option to settle the purchase contracts in cash. On February 15, 2007,
we received cash proceeds of $7.3 million to settle 293,500 purchase contracts
and, in exchange, issued 293,500 of our ordinary shares. We also released to the
settling holder 293,500 convertible preferred shares which were previously held
as collateral against the holder's obligation under the purchase contracts. Also
on February 15, 2007, we issued 7,146,978 of our ordinary shares to the holders
of our HyCUs who did not settle in cash, for which we held convertible preferred
shares to secure their obligations under the purchase contracts. On February 22,
2007, we exercised our right to foreclose on the 5,456,500 convertible preferred
shares held as collateral for the 5,456,500 purchase contracts that were not
settled in cash.

    In aggregate, we issued 7,440,478 of our ordinary shares on February 15,
2007 and, as of May 9, 2007, have 293,500 convertible preferred shares
outstanding. The convertible preferred shares have a dividend rate equal to the


                                       11
<PAGE>

                            SCOTTISH RE GROUP LIMITED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                 MARCH 31, 2007
                                   (UNAUDITED)


three month LIBOR plus 600 basis points. We are required to redeem these
securities for an aggregate amount of $7.3 million plus accrued dividends on May
21, 2007.

7.      Mediation

    On June 16, 2005, we requested mediation from Employers Reinsurance
Corporation ("ERC") pursuant to the stock purchase agreement transferring a 95%
interest in Scottish Re Life Corporation (formerly ERC Life Corporation) to
Scottish Holdings, Inc. We assert that ERC breached certain representations and
warranties under the agreement. Any negative outcome from this mediation will
not have a material adverse impact on our financial position because the
asserted breaches have already been fully reflected in our financial position at
March 31, 2007. The parties have held two mediation sessions, but have been
unable to resolve the dispute. No date has been scheduled for a future mediation
session.

8.      Subsequent Event

    On November 26, 2006, we entered into a Securities Purchase Agreement (the
"Securities Purchase Agreement") with MassMutual Capital Partners LLC
("MassMutual Capital"), a member of the MassMutual Financial Group, and SRGL
Acquisition, LLC, an affiliate of Cerberus Capital Management, L.P.
("Cerberus"), or another affiliate thereof (such affiliate of Cerberus, together
with MassMutual Capital, the "Investors") whereby, subject to the terms and
conditions set forth in the Securities Purchase Agreement, the Investors will
each purchase 500,000 of our convertible cumulative participating preferred
shares (the "Convertible Shares"), which will be newly issued, and which shares
may be converted into an aggregate of 150,000,000 ordinary shares, subject to
certain adjustments, if any, at any time and will automatically convert on the
ninth anniversary of the issue date if not previously converted (the above is
collectively referred to as the "Transaction").

    The Transaction closed on May 7, 2007 and gross proceeds from the sale of
the Convertible Shares to the Investors of $600.0 million were received. The
estimated net cash proceeds are approximately $560.0 million after giving effect
to the payment of estimated transaction expenses and the transaction fees to be
paid to the financial advisors. The Transaction will be reflected in our second
quarter 2007 financial statements.

    Upon the closing of the Transaction, the Investors hold securities
representing approximately 68.7% of the voting power of all our shareholders and
have the right to designate two-thirds of the members of the Board of Directors
for election.


                                       12
<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

General

Forward-Looking Statements

    Some of the statements contained in this report are not historical facts and
are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act. Forward-looking statements involve known and unknown
risks, uncertainties and other factors, which may cause the actual results to
differ materially from the forward-looking statements. Words such as
"anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates",
"may", "will", "continue", "project", and similar expressions, as well as
statements in the future tense, identify forward-looking statements.

    These forward-looking statements are not guarantees of our future
performance and are subject to risks and uncertainties that could cause actual
results to differ materially from the results contemplated by the
forward-looking statements. These risks and uncertainties include:

       o  uncertainties relating to the ratings accorded to us and our insurance
          subsidiaries;

       o  uncertainties in our ability to raise equity capital or other sources
          of funding to support ongoing capital and liquidity needs;

       o  uncertainties relating to future actions that may be taken by
          creditors, regulators and ceding insurers relating to our ratings and
          financial condition;

       o  the risk that our risk analysis and underwriting may be inadequate;

       o  changes in expectations regarding future realization of gross deferred
          tax assets;

       o  exposure to mortality experience which differs from our assumptions;

       o  risks arising from our investment strategy, including risks related to
          the market value of our investments, fluctuations in interest rates
          and our need for liquidity;

       o  uncertainties arising from control of our invested assets by third
          parties;

       o  developments in global financial markets that could affect our
          investment portfolio and fee income;

       o  changes in the rate of policyholder withdrawals or recapture of
          reinsurance treaties;

       o  the risk that our retrocessionaires may not honor their obligations to
          us;

       o  terrorist attacks on the United States and the impact of such attacks
          on the economy in general and on our business in particular;

       o  political and economic risks in developing countries;

       o  the impact of acquisitions, including our ability to successfully
          integrate acquired businesses, the competing demands for our capital
          and the risk of undisclosed liabilities;

       o  the risk that an ownership change will result in a limitation on our
          ability to fully utilize tax net operating losses;

       o  loss of the services of any of our key employees;

       o  losses due to foreign currency exchange rate fluctuations;

       o  uncertainties relating to government and regulatory policies (such as
          subjecting us to insurance regulation or taxation in additional
          jurisdictions);


                                       13
<PAGE>

       o  risks relating to recent class action litigations;

       o  the competitive environment in which we operate and associated pricing
          pressures; and

       o  changes in accounting principles.

    The effects of these factors are difficult to predict. New factors emerge
from time to time and we cannot assess the financial impact of any such factor
on our business or the extent to which any factor, or combination of factors,
may cause results to differ materially from those contained in any
forward-looking statement. Any forward-looking statement speaks only as of the
date of this report and we do not undertake any obligation, other than as may be
required under the Federal securities laws, to update any forward looking
statements to reflect events or circumstances after the date of such statement
or to reflect the occurrence of unanticipated events.

    This discussion and analysis should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the audited Consolidated Financial Statements and Notes thereto,
presented under Item 7 and Item 8, respectively, of our 2006 Annual Report.

Overview

    See "Overview" in Item 7 of our 2006 Annual Report.

Status of Credit and Financial Strength Ratings

      As of May 9, 2007, our insurer financial strength ratings are as follows:

                                                           Moody's
                                    A.M. Best   Fitch     Investors   Standard
                                    Company(1) Ratings(2) Service(3) & Poor's(4)
                                    ---------- ---------- ---------- -----------
Insurer Financial Strength
--------------------------
Ratings:
--------
Scottish Annuity and Life
  Insurance Company (Cayman) Ltd......   B+       BB+       Baa3       BB+
Scottish Re (U.S.), Inc. .............   B+       BB+       Baa3       BB+
Scottish Re Ltd ......................   B+       BB+        --        BB+
Scottish Re Life Corporation .........   B+       --         --        BB+

---------------------------------------
1 Stable outlook
2 Ratings watch: positive
3 Ratings under review, direction uncertain
4 Developing outlook

    The ability to write reinsurance partially depends on an insurer's financial
condition and its financial strength ratings. These ratings are based on an
insurance company's ability to pay policyholder obligations and are not directed
toward the protection of investors. Our ability to raise capital for our
business and the cost of this capital is influenced by our credit ratings. A
security rating is not a recommendation to buy, sell or hold securities. It is
subject to revision or withdrawal at any time by the assigning rating
organization, and each rating should be evaluated independently of any other
rating.

Critical Accounting Policies

    See the discussion of our Critical Accounting Policies in Item 7 of our 2006
Annual Report.


                                       14
<PAGE>

Results of Operations

    All amounts are reported in thousands of United States dollars, except share
amounts.

Consolidated results of operations

<TABLE>
<CAPTION>
                                                                              Three months ended
                                                                          ---------------------------
                                                                          March 31,         March 31,
                                                                            2007              2006
                                                                          ---------         ---------
<S>                                                                        <C>            <C>
Premiums earned, net .................................................     $ 458,214      $ 449,021
Investment income, net ...............................................       141,597        129,022
Fee income ...........................................................         4,630          3,733
Net realized losses ..................................................        (4,289)       (13,601)
Change in value of embedded derivatives, net .........................         5,592         10,146
                                                                           ----------     ----------
  Total revenues .....................................................       605,744        578,321
                                                                           ----------     ----------

Claims and other policy benefits .....................................       383,583        374,463
Interest credited to interest sensitive contract liabilities .........        35,302         42,701
Acquisition costs and other insurance expenses, net ..................        95,107         87,531
Operating expenses ...................................................        34,580         31,092
Collateral finance facilities expense ................................        73,695         31,087
Interest expense .....................................................         3,576          4,893
                                                                           ----------     ----------
  Total benefits and expenses ........................................       625,843        571,767
                                                                           ----------     ----------
Income (loss) before income taxes and minority interest ..............       (20,099)         6,554
Income tax (expense) benefit .........................................       (13,381)         7,457
                                                                           ----------     ----------
Income (loss) before minority interest ...............................       (33,480)        14,011
Minority interest ....................................................           268           (162)
                                                                           ----------     ----------
Net income (loss) ....................................................       (33,212)        13,849
Dividend declared on non-cumulative perpetual preferred shares .......        (2,266)        (2,266)
                                                                           ----------     ----------
Net income (loss) available to ordinary shareholders .................     $ (35,478)     $  11,583
                                                                           ==========     ==========
</TABLE>


Revenues

        Premiums earned in the first quarter ended March 31, 2007 increased 2%
to $458.2 million compared to $449.0 million in the same period in 2006. The
majority of this increase was in the Life Reinsurance International Segment,
where premium growth on U.K. protection treaties offset reduced premiums due to
cancelled business by $2.8 million along with the net positive effect of one-off
impacts, which increased premiums by an additional $2.4 million. The balance of
the increase is due to certain non-recurring adjustments to the Life Reinsurance
International Segment premium levels in the first quarter of 2006 which
depressed the comparative balance by $9.6 million.

        Investment income in the first quarter ended March 31, 2007 increased
10% to $141.6 million compared to $129.0 million in the same period in 2006.
This increase is principally due to the growth in our average invested assets.
Our total invested assets have increased significantly compared to the prior
year quarter due to the Ballantyne Re transaction, which closed in May 2006.
This increase is partially offset by lower investment income on a particular
equity-indexed annuity treaty along with the effect of the termination of four
funding agreements during the third quarter of 2006.

Expenses

        Claims and other policy benefits increased by 2% to $383.6 million in
the first quarter ended March 31, 2007 from $374.5 million in the same period in
2006. During the first quarter of 2007, the Life Reinsurance North America
Segment experienced favorable net mortality of approximately $14.0 million,
principally in the ING block.

        Interest credited to interest sensitive contract liabilities in the
first quarter ended March 31, 2007 decreased 17% to $35.3 million compared to
$42.7 million for the same period in 2006, principally due to the termination of


                                       15
<PAGE>

four funding agreements during the third quarter of 2006 and higher lapses on
annuity treaties in late 2006 and the first quarter of 2007.

        Acquisition costs and other insurance expenses increased 9% to $95.1
million in the first quarter ended March 31, 2007 from $87.5 million in the same
period in 2006. This increase is principally due to increased costs in the Life
Reinsurance International Segment, in which commission expense on U.K.
protection treaties are incurred at a much higher rate than our existing legacy
book of business. In addition, the cost of the Tartan Capital Limited
catastrophe bond issued in May 2006 resulted in an increase in the first quarter
of 2007 as compared to the same period in 2006.

        Operating expenses increased 11% to $34.6 million for the first quarter
ended March 31, 2007 from $31.1 million in the same period in 2006 primarily due
to higher personnel costs in the Life Reinsurance International Segment,
professional fees (mostly legal and tax) and higher office costs due to the
opening of several offices, partially offset by a recovery from an ERC
indemnification settlement. This indemnification settlement is not related to
the ERC mediation described in Note 7.

        Collateral facilities expense increased 137% to $73.7 million for the
first quarter ended March 31, 2007 from $31.1 million in the same period in 2006
due to the Ballantyne Re transaction completed in May 2006 and the drawdown on
the Stingray facility in the third quarter of 2006.

        Interest expense decreased 27% to $3.6 million for the first quarter
ended March 31, 2007 from $4.9 million in the same period in 2006 due to the
repurchase of the $115.0 million 4.5% Senior Convertible Notes during the fourth
quarter of 2006 and the February 2007 settlement of the HyCUs.



Segment Operating Results

Life Reinsurance North America

<TABLE>
<CAPTION>
                                                                  Three months ended
                                                                -----------------------
                                                                March 31,     March 31,
                                                                  2007          2006
                                                               ----------  -----------

<S>                                                             <C>          <C>
        Premiums earned, net ................................   $ 423,371    $ 428,918
        Investment income, net ..............................     137,919      123,941
        Fee income ..........................................       3,916        3,017
        Net realized losses .................................      (2,405)     (13,919)
        Change in value of embedded derivatives, net ........       5,592       10,146
                                                                ----------   ----------
          Total revenues ....................................     568,393      552,103
                                                                ----------   ----------

        Claims and other policy benefits ....................     357,934      347,280
        Interest credited to interest sensitive contract
          liabilities .......................................      35,302       42,701
        Acquisition costs and other insurance expenses, net .      87,223       84,408
        Operating expenses ..................................      12,258       14,592
        Collateral finance facilities expense ...............      68,856       30,543
        Interest expense ....................................       3,055        2,562
                                                                ----------   ----------
          Total benefits and expenses .......................     564,628      522,086
                                                                ----------   ----------
        Income before income taxes and minority interest ....   $   3,765    $  30,017
                                                                ==========   ==========
</TABLE>


Revenues

    Total revenues increased by 3% for the first quarter ended March 31, 2007 to
$568.4 million compared to $552.1 million in the same period in 2006. Net
premiums earned decreased by 1% in the first quarter of 2007 to $423.4 million
compared to $428.9 million in the same period in 2006. Contributing to the
decreased premium level were were higher excess retrocession premiums of
approximately $14.1 million resulting from the implementation of our
retrocession administration system in the second and third quarters of 2006,
combined with a


                                       16
<PAGE>

shift in underlying business mix that resulted in a higher retrocession premium
trend. Partially offsetting this were revisions reported to us by our clients,
combined with normal premium accrual fluctuations, resulting in a favorable
impact of $8.8 million during the first quarter of 2007. The net realized loss
in the first quarter ended March 31, 2007 was $2.4 million compared to a $13.9
million loss in the same period in 2006. The net realized loss for the prior
year includes losses related to selling investments in the first quarter of 2006
in preparation of funding the Ballantyne Re transaction.

    The change in value of the embedded derivatives arises from the application
of DIG B36 which addresses whether SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities" requires bifurcation of a debt instrument
into a debt host contract and an embedded derivative if the debt instrument
incorporates both interest rate risk and credit risk exposures that are
unrelated or only partially related to the creditworthiness of the issuer of
that instrument. Under DIG B36, modified coinsurance and coinsurance funds
withheld reinsurance agreements where interest is determined by reference to a
pool of fixed maturity assets are arrangements containing embedded derivatives
requiring bifurcation. In addition, reinsurance contracts with experience
refunds are also considered to be arrangements containing embedded derivatives
requiring bifurcation. The change in the value of embedded derivatives increased
revenues by $5.6 million in the first quarter of 2007 compared to a $10.1
million increase in the same period in 2006. The primary reason for the larger
increase in the prior year was the realization of losses on certain securities
held under a modified coinsurance arrangement that were sold in the first
quarter of 2006 in order to provide funding for the Ballantyne Re transaction.
These prior year gains largely offset the aforementioned prior year realized
securities losses.

    Net investment income increased by 11% in the first quarter ended March 31,
2007 to $137.9 million compared to $123.9 million in the same period in 2006.
The increase is principally due to the growth in our average invested assets.
Our total invested assets have increased significantly due to the proceeds of
the Ballantyne Re transaction that closed in May 2006, which contributed
approximately $1.7 billion of additional invested assets. As a result,
investment income from the non-annuity-related portfolios was $38.0 million
higher in the first quarter of 2007 as compared to the same period in 2006.
Partially offsetting this favorable variance were $11.7 million lower investment
income on a large equity-indexed annuity treaty for which there are
substantially offsetting fluctuations in reserves, interest credited and net
acquisition costs. Additionally, offsetting the favorable variance was a $7.5
million reduction due to the termination of four funding agreements in the third
quarter of 2006 as a result of ratings downgrades and reduced investment income
on annuity business due to declining account values resulting from higher
lapses.

    Yields on the portfolio managed by our external investment managers relating
to fixed rate assets were 5.4% and 5.2% at March 31, 2007 and 2006,
respectively. Yields on floating rate assets are indexed to LIBOR and increased
to 5.8% at March 31, 2007 from 5.3% at March 31, 2006.

Expenses

    Claims and other policy benefits for the first quarter ended March 31, 2007
increased 3% to $357.9 million compared to $347.3 million in the same period in
2006. During the first quarter of 2006, we experienced unfavorable mortality
against our expectations of approximately $16.0 million, principally within our
ING block. Although gross claims were within expectations in the aggregate, a
higher number of smaller claims within our retention limit resulted in
retrocession recoveries below our expectations. During the second half of 2006,
we updated our mortality experience studies and utilized these updated studies
in our best estimate models for 2007. In general, our 2007 best estimate models
roughly approximate the equivalent level of incurred claims as actually
experienced in 2006. During the first quarter of 2007, we experienced favorable
assumed mortality for the ING block of approximately $26.0 million, representing
an actual to expected ratio of 90%. The positive experience was driven by
favorable results on large claims, especially in the $2.0 million and greater
size range. Although the claim count was the highest for any quarter to date,
the average size claim was smaller than historical experience. The favorable
assumed mortality was partially offset by lower than expected retrocession
recoveries of approximately $16.0 million. As such, net mortality for the ING
block was approximately $10.0 million favorable for the first quarter of 2007.
Experience in our organic and SRLC blocks contributed an additional $4.0 million
of favorable net mortality experience in the quarter. In total, our net
mortality was $14.0 million favorable or 95% of expected for the first quarter
of 2007.

    Our pricing and actuarial projection models include various lapse
assumptions by treaty and by product type which are based on historical
experience and industry expectations. Beginning in the third quarter of 2006, we
noted that the lapse distribution pattern was such that certain policies had
higher than average lapses while others had lower than average lapses. However,
the policies with higher lapses had the higher margins and the policies


                                       17
<PAGE>

with lower lapses had the lower margins. Based on lapse experience to date, it
appears that this lapse pattern is isolated in certain preferred classes and in
the early durations of the policies and, therefore, the unfavorable impact will
decrease over time. During the first quarter of 2007, we experienced
approximately $11.0 million of adverse lapse reserve impact compared to
approximately $13.0 million and $14.0 million in the third and fourth quarters
of 2006, respectively. Partially offsetting this impact were additional lapses
for certain policyholders which had a significant favorable impact on our
retrocession reserves and resulted in a release of reserves of $7.3 million
during the first quarter of 2007.

    Interest credited to interest sensitive contract liabilities in the first
quarter ended March 31, 2007 decreased 17% to $35.3 million compared to $42.7
million in the same period in 2006. The decrease is principally due to the
impact of the termination of four funding agreements in the third quarter of
2006 for which the first quarter of 2006 contained $6.2 million of interest
credited. Also impacting the decline was lower annuity business due to higher
lapses in the second half of 2006. Interest sensitive contract liabilities
amounted to $3.3 billion at March 31, 2007 and $4.0 billion at March 31, 2006.

    Acquisition costs and other insurance expenses in the first quarter ended
March 31, 2007 increased 3% to $87.2 million compared to $84.4 million in the
same quarter in 2006. As a percentage of net premiums earned, acquisition and
other insurance expenses were 20.6% and 19.7% for the 2007 and 2006 quarterly
periods, respectively.

    Operating expenses for the first quarter ended March 31, 2007 decreased 16%
to $12.3 million compared to $14.6 million in the same period in 2006. Operating
expenses as a percentage of operating revenues (total revenues excluding
realized gains and losses and changes in the value of embedded derivatives) were
2.2% and 2.6% for the 2007 and 2006 periods, respectively. The overall decrease
in operating expenses relates primarily to the first quarter 2007 receipt of a
$2.6 million indemnification settlement related to the acquisition of the ERC
business. This settlement was based on a provision in the purchase agreement
regarding the level of statutory unauthorized reinsurance liabilities required
for certain reinsurers. This indemnification settlement is not related to the
ERC mediation described in Note 7.

    Collateral finance facilities expense in the quarter ended March 31, 2007
increased 125% to $68.9 million compared to $30.5 million in the same period of
2006. The increase is due to the impact of the Ballantyne Re transaction which
closed in May 2006 along with higher financial guarantor costs resulting from
our credit rating downgrades.

Life Reinsurance International

                                                           Three months ended
                                                         ----------------------
                                                         March 31,    March 31,
                                                           2007         2006
                                                         ---------    ---------

       Premiums earned, net ..........................   $ 34,843    $ 20,103
       Investment income, net ........................      3,043       2,989
       Net realized losses ...........................       (625)     (1,138)
                                                         ---------   ---------
        Total revenues ...............................     37,261      21,954
                                                         ---------   ---------

       Claims and other policy benefits ..............     25,649      27,183
       Acquisition costs and other insurance
        expenses, net ................................      5,921       2,817
       Operating expenses ............................      9,812       5,777
                                                         ---------   ---------
        Total benefits and expenses ..................     41,382      35,777
                                                         ---------   ---------
       Loss before income taxes and minority interest.   $ (4,121)   $(13,823)
                                                         =========   =========

Revenues

    Net premiums earned during the first quarter ended March 31, 2007 increased
73% to $34.8 million compared to $20.1 million in the same period in 2006.
Excluding the impact of non-recurring items in both 2007 and 2006, underlying
premiums grew by $2.8 million. The increase was due principally to the impact of
new U.K. protection treaties won in 2006 of $9.0 million, although offset by
reduced premium on other cancelled business of $6.2 million related to Middle
East, Latin America, U.S. lives business and Loss of License. Additionally,
non-recurring impacts in 2007 contributed $2.4 million to the increase. These
non-recurring items included additional premium on captive reinsurance business
within our protected cell company of $1.5 million and a catch-up of premium
bookings


                                       18
<PAGE>

due to late notifications by certain clients. In addition, the corresponding
quarter of 2006 had the following non-recurring impacts which reduced earned
premium: the true-up of data as a result of revised information received from
clients of $4.5 million and clean-up activities in the Loss of License/personal
accident block of $5.1 million.

    Investment income in the quarter ended March 31, 2007 and 2006 was $3.0
million.

    Realized losses were $0.6 million in the first quarter ended March 31, 2007,
compared to $1.1 million for 2006. The 2007 losses related to the impairment of
a bond of $0.6 million.

Expenses

    Claims and other policy benefits decreased by 6% to $25.6 million in the
first quarter ended March 31, 2007 from $27.2 million in the same period in
2006. Claims cost was higher than expected for the first quarter ended March 31,
2007 due to unexpected negative items totaling $2.9 million. The largest items
related to claims cost at recapture of certain pools of business of $1.9
million, captive claims of $1.5 million and a number of late reported claims
beyond normal expectation of $2.5 million as a whole. However, the result on the
U.S. lives business contributed $3.0 million of favorable claims cost through
release of reported, but not paid reserves and claims releases arising from
premium income accrual reductions. In the first quarter ended March 31, 2006,
costs were also higher than expected by $4.3 million due to adverse mortality
adjustments on retrocession recoverables and updated cedant data.

        Acquisition costs and other insurance expenses increased 110% to $5.9
million in the first quarter ended March 31, 2007 from $2.8 million in 2006.
Commission expense for new protection treaties entered into in 2006 resulted in
an increase of $2.3 million because such treaties carry higher commission levels
than those experienced in the existing book.

        Operating expenses increased 70% to $9.8 million in the first quarter
ended March 31, 2007 from $5.8 million in 2006. The main driver of the expense
increase was additional senior level staff in support of our new business
initiatives hired for U.K. and other international operations (Middle East and
Singapore) of $1.0 million. In addition there were transaction bonuses of $0.8
million, costs of running both the Windsor and London offices of $0.4 million,
irrecoverable VAT of $0.5 million and other expense increases of $0.4 million.

Corporate and Other

                                                           Three months ended
                                                         ----------------------
                                                         March 31,    March 31,
                                                           2007         2006
                                                         ---------    ---------
       Investment income, net ........................   $    635    $  2,092
       Fee income ....................................        714         716
       Net realized gains (losses) ...................     (1,259)      1,456
                                                         ---------   ---------
        Total revenues ...............................         90       4,264
                                                         ---------   ---------

       Acquisition costs and other insurance
        expenses, net.................................      1,963         306
       Operating expenses ............................     12,510      10,723
       Collateral finance facilities expense .........      4,839         544
       Interest expense ..............................        521       2,331
                                                         ---------   ---------
        Total benefits and expenses ..................     19,833      13,904
                                                         ---------   ---------
       Loss before income taxes ......................   $(19,743)   $ (9,640)
                                                         =========   =========


Revenues

        Investment income decreased 70% to $0.6 million for the first quarter
ended March 31, 2007 compared to $2.1 million in the same period in 2006.
Investment income arises in the segment due to capital not specifically
allocated to the Life Reinsurance North America or Life Reinsurance
International Segments. Investment income will increase or decrease as capital
is raised and deployed to the operating segments. The overall decrease in
investment income is principally due to decreased invested assets as a result of
the repayment of the $115.0 million 4.5% Senior Convertible Notes in December of
2006.


                                       19
<PAGE>

        The realized loss of $1.3 million for the first quarter ended March 31,
2007 compared to a realized gain of $1.5 million in the same period in 2006. The
realized loss during the quarter represents $0.8 million of foreign exchange
losses and $0.2 million of realized loss on other than temporary impairments
from our investment portfolio.

Expenses

        Acquisition costs and other insurance expenses increased 542% to $2.0
million compared to $0.3 million in the same period in 2006. This increase is
due to the Tartan Capital Limited catastrophe bond issued in May 2006, which is
expensed at approximately $1.5 million per quarter.

        Operating expenses increased 17% to $12.5 million for the first quarter
ended March 31, 2007 compared to $10.7 million in the same period in 2006. The
increase in expenses was primarily due to increased professional fees,
principally in tax and legal costs.

        Collateral finance facilities expense increased 790% to $4.8 million for
the first quarter ended March 31, 2007 compared to $0.5 million in the same
period in 2006. The increase was primarily due to borrowing under the Stingray
facility during the third quarter of 2006, which results in collateral facility
expense of approximately $4.5 million per quarter.

        Interest expense decreased 78% to $0.5 million for the first quarter
ended March 31, 2007 compared to $2.3 million in the same period in 2007. This
decrease was due to the repurchase in the fourth quarter of 2006 of the $115.0
million 4.5% Senior Convertible Notes and the February 2007 settlement of the
HyCu's.


Realized gains (losses)

    During the first quarter ended March 31, 2007, consolidated net realized
losses amounted to $4.3 million in comparison with $13.6 million in the same
period in 2006. During the first quarter ended March 31, 2007, there were losses
of $4.3 million in respect of other than temporary impairments. There were no
other than temporary impairments during the first quarter ended March 31, 2006.

Income Taxes

    Income taxes are recorded in accordance with SFAS No. 109, "Accounting for
Income Taxes" ("SFAS No. 109"). In accordance with SFAS No. 109, for all years
presented we use the asset and liability method to record deferred income taxes.
Accordingly, deferred income tax assets and liabilities are recognized that
reflect the net tax effect of the temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes, using enacted tax rates. Such temporary
differences are primarily due to tax basis of reserves for future policy
benefits, deferred acquisition costs, and net operating loss carry forwards. A
valuation allowance is applied to deferred tax assets if it is more likely than
not that all, or some portion, of the benefits related to the deferred tax
assets will not be realized.

    Our effective tax rate in each reporting period is determined by dividing
the net tax benefit (expense) by our pre-tax income or loss. The change in our
effective tax rate is due primarily to the amount in any reporting period of
pre-tax earnings attributable to different subsidiaries (which changes from time
to time), each of which is subject to different statutory tax rates, as well as
any adjustment to the deferred tax asset valuation allowance. Pre-tax earnings
of certain subsidiaries in any period may be impacted by the amount of various
inter-company charges, including but not limited to net worth maintenance fees
and other management fees paid to Scottish Annuity & Life Insurance Company
(Cayman) Ltd. and to the parent holding company. These fees are charged in
accordance with our inter-company charging policy and may be adjusted
periodically within limits prescribed by applicable transfer pricing
regulations.

    We generate deferred tax assets principally due to net operating losses,
reserves and unrealized losses on investment securities. In accordance with
GAAP, we must conclude whether the future realization of our deferred tax asset
is "more likely than not". The evaluation regarding realizability of deferred
tax assets is made on a gross as opposed to a net basis. Sources of support for
the gross deferred tax asset are the reversal of deferred tax liabilities within
the carry forward period (which in the United States is 15 years), projected
future taxable income


                                       20
<PAGE>

and tax planning strategies. Pursuant to the guidance under SFAS No. 109, we are
currently unable to rely on projections of future taxable income.

    Future quarterly tax amounts will continue to be dependent upon the
relationship between pre-tax GAAP profits and statutory profits and will also be
impacted by the size and timing of certain statutory related deferred tax
liabilities. Moreover, management will continue to assess and determine the need
for the amount of the valuation allowance in subsequent periods in accordance
with the requirements of SFAS No. 109 or in accordance with FIN 48.

    Income tax expense in the first quarter ended March 31, 2007 was $13.4
million compared to an income tax benefit of $7.5 million in the same period in
2006. The change in our effective tax rate in the first quarter ended March 31,
2007 compared to the same period in 2006 is primarily related to an $ 11.0
million valuation allowance established in the first quarter of 2007 on deferred
tax assets. The valuation allowance principally relates to current period tax
benefits not being recognized as we can no longer recognize tax benefits for
certain legal entities. In addition, a valuation allowance was established on
deferred tax assets resulting from estimated statutory and tax projections
related to certain legal entities.

Financial Condition

Investments

    At March 31, 2007, the portfolio controlled by us consisting of fixed income
securities, preferred stock and cash was $8.8 billion. The portfolio controlled
by us excludes the assets held by ceding insurers under modified coinsurance and
funds withheld coinsurance arrangements. The majority of these assets are
publicly traded securities; however, at March 31, 2007, $505.2 million of this
amount represents investments in private securities. Of the total portfolio
controlled by us, $8.3 billion represented the fixed income and preferred stock
portfolios managed by external investment managers and $0.5 billion represented
other cash balances. At December 31, 2006, the portfolio controlled by us
consisted of fixed income securities, preferred stock and cash was $8.7 million.
The majority of these assets were publicly traded; however, at December 31,
2006, $532.9 million represented investments in private securities. Of the total
portfolio controlled by us, $8.2 billion represented the fixed income and
preferred stock portfolios managed by external investment managers and $0.5
billion represented other cash balances.

    At March 31, 2007, the average Standard & Poor's rating of our portfolio was
"AA", the average effective duration was 2.9 years and the average book yield
was 5.6%, as compared with an average rating of "AA", an average effective
duration of 2.9 years and an average book yield of 5.5% at December 31, 2006. At
March 31, 2007, the unrealized depreciation on investments, net of tax and
deferred acquisition costs, was $53.6 million as compared with unrealized
depreciation on investments, net of tax and deferred acquisition costs, of $41.0
million at December 31, 2006. The unrealized depreciation on investments is
included in our consolidated balance sheet as part of shareholders' equity.

    The table below sets forth the total returns earned by our portfolio for the
quarter ended March 31, 2007, compared to the returns earned by three indices:
the Lehman Brothers Global Bond Index, the S&P 500, and a customized index that
we developed to take into account our investment guidelines and the risk
characteristics of the underlying liabilities. We believe that this customized
index is the most relevant benchmark for our portfolio's performance.

                                                            Quarter ended
                                                           March 31, 2007
                                                           --------------
          Portfolio performance ..........................       1.18%
          Customized index ...............................       1.32%
          Lehman Brothers Global Bond Index ..............       1.18%
          S&P 500 ........................................       0.64%


                                       21
<PAGE>

    The following table presents the fixed income investment portfolio credit
exposure by Standard & Poor's ratings, where available, and otherwise by ratings
provided by other agencies.

<TABLE>
<CAPTION>
                                                  March 31, 2007           December 31, 2006
                                            -------------------------   -----------------------
Ratings                                     $ in  millions     %        $ in millions      %
-------                                     --------------  ---------   --------------  -------
<S>                                          <C>              <C>      <C>            <C>
AAA ....................................     $  3,408.4        38.9%   $  3,350.5      38.5%
AA .....................................        2,382.5        27.2       2,353.1      27.0
A ......................................        2,065.6        23.6       2,050.9      23.6
BBB ....................................          880.3        10.0         918.5      10.6
BB or below ............................           23.5         0.3          24.9       0.3
                                             ----------       ------    ----------     ------
Total ..................................     $  8,760.3       100.0%   $  8,697.9     100.0%
                                             ==========       ======    ==========    ======
</TABLE>

    The following table illustrates the fixed income investment portfolio sector
exposure.

<TABLE>
<CAPTION>
                                                  March 31, 2007           December 31, 2006
                                            -------------------------   -----------------------
Sector                                      $ in  millions     %        $ in millions      %
------                                      --------------  ---------   --------------  -------
<S>                                          <C>              <C>      <C>            <C>
U.S. Treasury securities and U.S.
 government agency obligations .........     $     63.6         0.7%   $     68.0       0.8%
Corporate securities ...................        2,712.4        31.0       2,700.5      31.1
Municipal bonds ........................           52.4         0.6          52.2       0.6
Mortgage and asset backed securities ...        5,307.5        60.6       5,244.8      60.3
Preferred stock ........................          112.0         1.3         116.9       1.3
                                             ----------       ------    ----------     ------
                                                8,247.9        94.2       8,182.4      94.1
Cash ...................................          512.4         5.8         515.5       5.9
                                             ----------       ------    ----------     ------
Total ..................................     $  8,760.3       100.0%   $  8,697.9     100.0%
                                             ==========       ======    ==========    ======
</TABLE>

    Management reviews securities with material unrealized losses and tests for
other than temporary impairments on a quarterly basis. Factors involved in the
determination of potential impairment include fair value as compared to cost,
length of time the value has been below cost, credit worthiness of the issuer,
forecasted financial performance of the issuer, position of the security in the
issuer's capital structure, the presence and estimated value of collateral or
other credit enhancement, length of time to maturity, interest rates and our
intent and ability to hold the security until the market value recovers. When a
decline is considered to be other than temporary, the cost basis of the impaired
asset is adjusted to its fair value and a corresponding realized investment loss
is recognized in the consolidated statements of income (loss). The actual value
at which such financial instruments could actually be sold or settled with a
willing buyer may differ from such estimated fair values.

    The following tables present the estimated fair values and gross unrealized
losses for the fixed maturity investments and preferred stock that have
estimated fair values below amortized cost or cost as of March 31, 2007 and
December 31, 2006. These investments are presented by class and grade of
security, as well as the length of time the related market value has remained
below amortized cost or cost.


                                       22
<PAGE>

<TABLE>
<CAPTION>
                                                                                March 31 2007
                                             ---------------------------------------------------------------------------------------
                                                                             Equal to or greater
                                               Less than 12 months              than 12 months                     Total
                                             ------------------------      -------------------------      --------------- ----------
                                             Estimated     Unrealized      Estimated      Unrealized      Estimated       Unrealized
                                             fair value       loss         fair value        loss         fair value         loss
                                             ----------    ----------      ----------     ----------      ----------      ----------
<S>                                         <C>            <C>             <C>            <C>             <C>            <C>
Investment grade securities:
----------------------------
CMO ...................................     $  331,980     $   (1,581)     $  275,977     $   (5,936)     $  607,957     $   (7,517)
Corporates ............................        687,591        (14,954)        912,681        (28,680)      1,600,272        (43,634)
Governments ...........................         27,861           (471)         28,435           (862)         56,296         (1,333)
MBS ...................................         18,974           (146)        138,409         (4,118)        157,383         (4,264)
Municipals ............................          1,910            (15)         27,757           (580)         29,667           (595)
Other structured securities ...........      1,814,492        (18,880)        611,603        (10,426)      2,426,095        (29,306)
Preferred stocks ......................         12,085           (237)         90,953         (2,632)        103,038         (2,869)
                                            ----------     -----------     ----------     -----------     ----------     -----------
Total Investment grade
 securities ...........................      2,894,893        (36,284)      2,085,815        (53,234)      4,980,708        (89,518)
                                            ----------     -----------     ----------     -----------     ----------     -----------
Below investment grade
----------------------
 securities corporates:
 ----------------------
Corporates ............................              -              -          14,393           (524)         14,393           (524)
Other structured securities ...........          1,559           (370)             45            (82)          1,604           (452)
Preferred stock .......................              -              -             347            (19)            347            (19)
Total below investment
 grade securities .....................          1,559           (370)         14,785           (625)         16,344           (995)
                                            ----------     -----------     ----------     -----------     ----------     -----------
Total .................................     $2,896,452     $  (36,654)     $2,100,600     $  (53,859)     $4,997,052     $  (90,513)
                                            ==========     ===========     ==========     ===========     ==========     ===========


                                                                              December 31, 2006
                                             ---------------------------------------------------------------------------------------
                                                                             Equal to or greater
                                               Less than 12 months              than 12 months                     Total
                                             ------------------------      -------------------------      --------------- ----------
                                             Estimated     Unrealized      Estimated      Unrealized      Estimated       Unrealized
                                             fair value       loss         fair value        loss         fair value         loss
                                             ----------    ----------      ----------     ----------      ----------      ----------
Investment grade securities:
----------------------------
CMO ...................................     $  369,457     $   (2,365)     $  252,252     $   (6,327)     $  621,709     $   (8,692)
Corporates ............................        750,806        (15,690)        864,053        (29,078)      1,614,859        (44,768)
Governments ...........................         35,805           (615)         21,072           (752)         56,877         (1,367)
MBS ...................................         12,116           (136)        138,992         (4,674)        151,108         (4,810)
Municipal .............................         19,865           (187)         18,013           (640)         37,878           (827)
Other structured securities ...........        415,596         (2,511)        613,974        (11,735)      1,029,570        (14,246)
Preferred stock .......................         12,246           (295)         95,646         (3,181)        107,892         (3,476)
                                            ----------     -----------     ----------     -----------     ----------     -----------
Total investment grade
  securities ..........................      1,615,891        (21,799)      2,004,002        (56,387)      3,619,893        (78,186)
                                            ----------     -----------     ----------     -----------     ----------     -----------
Below investment grade
----------------------
  securities corporates:
  ----------------------
Corporates ............................          3,416            (58)         14,975           (570)         18,391           (628)
Other structured securities ...........          1,405           (421)          1,256           (662)          2,661         (1,083)
Preferred stock .......................              -              -             664            (33)            664            (33)
                                            ----------     -----------     ----------     -----------     ----------     -----------
Total below investment
  grade securities ....................          4,821           (479)         16,895         (1,265)         21,716         (1,744)
                                            ----------     -----------     ----------     -----------     ----------     -----------
Total .................................     $1,620,712     $  (22,278)     $2,020,897     $  (57,652)     $3,641,609     $  (79,930)
                                            ==========     ===========     ==========     ===========     ==========     ===========
</TABLE>


    At March 31, 2007, our fixed income portfolio had 2,983 securities and $90.5
million of gross unrealized losses. No single position had an unrealized loss
greater than $1.1 million. There were $36.9 million of unrealized gains on the
remainder of the portfolio. There were 130 private securities in an unrealized
loss position totaling $4.4 million. At December 31, 2006, our fixed income
portfolio had 2,967 securities and $79.9 million of gross unrealized losses. No
single position had an unrealized loss greater than $1.3 million. There were
$41.6 million of unrealized gains on the remainder of the portfolio. There were
128 private securities in an unrealized loss position totaling $5.1 million.


                                       23
<PAGE>

    Based on our analysis of each security whose price has been below market for
greater than twelve months, we believe that the financial strength, liquidity,
leverage, future outlook, and our ability and intent to hold the security until
recovery support the view that the security was not other than temporarily
impaired as of March 31, 2007. The unrealized losses on fixed maturity
securities are primarily a result of rising interest rates, changes in credit
spreads and the long-dated maturities of the securities. Additionally, as of
March 31, 2007, approximately 98.9% of the gross unrealized losses are
associated with investment grade securities.

    Unrealized losses on securities that have been in an unrealized loss
position for periods greater than two years amounted to $12.5 million at March
31, 2007 and $7.8 million at December 31, 2006. Unrealized losses on
non-investment grade securities amounted to $1.0 million and $1.7 million at
March 31, 2007 and December 31, 2006, respectively. Of these amounts,
non-investment grade securities with unrealized losses of $0.6 million at March
31, 2007 and $1.3 million at December 31, 2006 had been in an unrealized loss
position for a period greater than one year.

    The following tables illustrate the by industry analysis of the unrealized
losses at March 31, 2007 and December 31, 2006:

<TABLE>
<CAPTION>
                                                       March 31, 2007
                              ---------------------------------------------------------------
                              Amortized              Estimated              Unrealized
                                 Cost         %      Fair Value      %         Loss       %
                              ---------     -----    ---------     -----    ----------  -----
Industry
--------
<S>                          <C>            <C>    <C>             <C>    <C>          <C>
Mortgage and asset backed
 securities...............   $ 3,234,577    63.6%  $ 3,193,039     63.9%  $  (41,538)   45.9%
Banking...................       306,252     6.0       299,661      6.0       (6,591)    7.3
Communications............       187,473     3.7       180,699      3.6       (6,774)    7.5
Consumer noncyclical......       149,445     2.9       143,467      2.9       (5,978)    6.6
Brokerage.................       128,555     2.6       125,897      2.5       (2,658)    2.9
Insurance.................       125,427     2.5       122,584      2.5       (2,843)    3.1
Consumer cyclical.........       123,854     2.4       119,894      2.4       (3,960)    4.4
Finance Companies                120,604     2.4       117,842      2.4       (2,762)    3.0
Electric..................       119,502     2.3       116,645      2.3       (2,857)    3.2
Other*....................       591,876    11.6       577,324     11.5      (14,552)   16.1
                             -----------   ------  -----------    ------  -----------  ------
Total.....................   $ 5,087,565   100.0%  $ 4,997,052    100.0%  $  (90,513)  100.0%
                             ===========   ======  ===========    ======  ===========  ======

                                                     December 31, 2006
                              ---------------------------------------------------------------
                               Amortized             Estimated             Unrealized
                                  Cost        %     Fair Value      %         Loss        %
                              ---------     -----    ---------     -----    ----------  -----
Industry
--------
Mortgage and asset backed
   securities.............   $ 1,833,878    49.3%  $ 1,805,047     49.6%  $  (28,831)   36.1%
Banking...................       302,782     8.1       296,225      8.1       (6,557)    8.2
Communications............       204,320     5.5       196,181      5.4       (8,139)   10.2
Consumer non-cyclical.....       153,941     4.1       148,277      4.1       (5,664)    7.1
Insurance.................       137,378     3.7       134,516      3.7       (2,862)    3.6
Financial companies.......       126,646     3.4       124,233      3.4       (2,413)    3.0
Consumer cyclical.........       127,643     3.5       123,455      3.4       (4,188)    5.2
Other*....................       834,951    22.4       813,675     22.3      (21,276)   26.6
                             -----------   ------  -----------    ------  -----------  ------
Total.....................   $ 3,721,539   100.0%  $ 3,641,609    100.0%  $  (79,930)  100.0%
                             ===========   ======  ===========    ======  ===========  ======
</TABLE>

*Other industries represent less than 3% of the estimated fair value.

    The expected maturity dates of our fixed maturity investments that have an
unrealized loss at March 31, 2007 and December 31, 2006 are presented in the
tables below.


                                       24
<PAGE>


<TABLE>
<CAPTION>
                                                                    March 31, 2007
                                          ------------------------------------------------------------------
                                          Amortized              Estimated              Unrealized
                                            Cost         %      Fair Value       %         Loss          %
                                          ---------     -----    ---------     -----    ----------     -----
<S>                                      <C>           <C>      <C>           <C>      <C>            <C>
Maturity
Due in one year or less ..............   $  392,031      7.7%   $  388,859      7.8%   $   (3,172)      3.5%
Due in one through five years ........    2,838,228     55.8     2,801,233     56.1       (36,995)     40.9
Due in five through ten years ........    1,041,551     20.5     1,021,467     20.4       (20,084)     22.2
Due after ten years ..................      815,755     16.0       785,493     15.7       (30,262)     33.4
                                         ----------    ------   ----------    ------   -----------    ------
Total ................................   $5,087,565    100.0%   $4,997,052    100.0%   $  (90,513)    100.0%
                                         ==========    ======   ==========    ======   ===========    ======

                                                                   December 31, 2006
                                          ------------------------------------------------------------------
                                          Amortized              Estimated              Unrealized
                                            Cost         %      Fair Value       %         Loss          %
                                          ---------     -----    ---------     -----    ----------     -----
Maturity
Due in one year or less ..............   $  337,455      9.1%   $  334,582      9.2%   $   (2,873)      3.6%
Due in one through five years ........    1,401,180     37.6     1,377,519     37.8       (23,661)     29.6
Due in five through ten years ........    1,206,367     32.4     1,179,292     32.4       (27,075)     33.9
Due after ten years ..................      776,537     20.9       750,216     20.6       (26,321)     32.9
                                         ----------    ------   ----------    ------   -----------    ------
Total ................................   $3,721,539    100.0%   $3,641,609    100.0%   $  (79,930)    100.0%
                                         ==========    ======   ==========    ======   ===========    ======
</TABLE>

    At March 31, 2007, there were 1,983 securities with unrealized loss
positions, with one security having an unrealized loss greater than $1.1
million. At December 31, 2006, there were 1,796 securities with unrealized loss
securities, with two securities having an unrealized loss greater than $1.0
million. The increase in the number of securities with unrealized losses is
primarily attributable to increases in interest rates.

    At March 31, 2007, there were five securities with a fair value that traded
continuously at less than 80% of amortized cost for at least six months or 90%
of amortized cost for at least 12 months. The total unrealized loss on these
securities amounted to $0.7 million. At December 31, 2006, there were three
securities with a fair value that traded continuously at less than 80% of
amortized cost for at least six months or 90% of amortized cost for at least 12
months. The total unrealized loss on this security amounted to $0.8 million.

    The following tables provide details of the sales proceeds, realized loss,
length of time the security had been in an unrealized loss position and reason
for sale for securities sold with a realized loss during the periods March 31,
2007 and 2006.

<TABLE>
<CAPTION>
                                                                Three months ended March 31, 2007
                                 ----------------------------------------------------------------------------------------
                                    Credit Concern       Relative Value            Tactical                  Total
                                 -------------------   -----------------      --------------------    -------------------
                                 Proceeds       Loss   Proceeds     Loss      Proceeds        Loss    Proceeds       Loss
                                 --------       ----   --------     ----      --------        ----    --------       ----
<C>                            <C>         <C>        <C>         <C>        <C>          <C>        <C>          <C>
Days
0-90.......................    $1,219,710  $ (35,913) $        -  $      -   $73,436,313  $ (71,295) $74,656,023  $(107,208)
91-180.....................             -          -     700,267   (16,708)    1,152,349    (18,238)   1,852,616    (34,946)
181-270....................             -          -           -         -       812,678     (5,725)     812,678     (5,725)
Greater than 270...........     3,056,570   (210,387)  3,278,000   (34,457)    5,202,771    (25,664)  11,537,341   (270,508)
                               ----------  ---------- ----------  ---------  -----------  ---------- -----------  ----------
Total......................    $4,276,280  $(246,300) $3,978,267  $(51,165)  $80,604,111  $(120,922) $88,858,658  $(418,387)
                               ==========  ========== ==========  =========  ===========  ========== ===========  ==========
</TABLE>



<TABLE>
<CAPTION>
                                                          Three months ended March 31, 2006
                                 ------------------------------------------------------------------------------------------
                                  Credit Concern        Relative Value             Tactical                    Total
                                 ----------------     --------------------    ------------------        -------------------
                                 Proceeds    Loss     Proceeds        Loss     Proceeds     Loss        Proceeds       Loss
                                 --------    ----     --------        ----     --------     ----        --------       ----
<C>                            <C>        <C>       <C>        <C>      <C>        <C>      <C>         <C>
Days
0-90.......................    $   2,821  $   (19)  $  52,679  $     (22)   $  41,523    $ (171)     $   97,023    $  (212)
91-180.....................        2,729      (59)      9,635       (266)      13,632      (374)         25,996       (699)
181-270....................        6,124     (678)      1,255        (19)         856       (47)          8,235       (744)
Greater than 270...........        2,300     (314)     14,054       (303)       9,751      (177)         26,105       (794)
                               ---------  --------  ---------     -------   ---------    -------     ----------    --------
Total......................    $  13,974  $(1,070)  $  77,623     $ (610)   $  65,762    $ (769)     $  157,359    $(2,449)
                               =========  ========  =========     =======   =========    =======     ==========    ========
</TABLE>


                                       25
<PAGE>

Funds withheld at interest

    Funds withheld at interest arise on contracts written under modified
coinsurance agreements and funds withheld coinsurance agreements. In substance,
these agreements are identical to coinsurance treaties except that the ceding
company retains control of and title to the assets. The deposits paid to the
ceding company by the underlying policyholders are held in a segregated
portfolio and managed by the ceding company or by investment managers appointed
by the ceding company. These treaties transfer a quota share of the risks. The
funds withheld at interest represent our share of the ceding companies'
statutory reserves. The cash flows exchanged with each monthly settlement are
netted and include, among other items, our quota share of investment income on
our proportionate share of the portfolio, realized losses, realized gains
(amortized to reflect the statutory rules relating to interest maintenance
reserve), interest credited and expense allowances.

    At March 31, 2007, funds withheld at interest totaled $1.9 billion with an
average rating of "A+", an average effective duration of 4.7 years and an
average book yield of 5.9%, as compared to $1.9 billion with an average rating
of "A", an average effective duration of 5.0 years and an average book yield of
5.9% at December 31, 2006. These are fixed income investments and include
marketable securities, commercial mortgages, private placements and cash. The
market value of the funds withheld amounted to $1.9 billion at March 31, 2007
and December 31, 2006.

    At March 31, 2007 and December 31, 2006, funds withheld at interest were in
respect of seven contracts with five ceding companies, respectively. At March
31, 2007, we had three contracts with Lincoln National Life Insurance Company
that accounted for $829.9 billion or 45% of the funds withheld balances.
Additionally, we had one contract with Security Life of Denver International
Limited that accounted for $342.9 million or 19% of the funds withheld balances
and one contract with Fidelity & Guaranty Life that accounted for $608.2 million
or 33% of the funds withheld balances. The remaining contracts were with
Illinois Mutual Insurance Company and American Founders Life Insurance Company.
Lincoln National Life Insurance Company has financial strength ratings of "A+"
from AM. Best, "AA" from Standard & Poor's, "Aa3" from Moody's and "AA" from
Fitch. In the event of insolvency of the ceding companies on these arrangements,
we would need to exert a claim on the assets supporting the contract
liabilities. However, the risk of loss is mitigated by our ability to offset
amounts owed to the ceding company with the amounts owed to us by the ceding
company. Reserves for future policy benefits and interest sensitive contract
liabilities relating to these contracts amounted to $1.8 billion and $1.9
billion at March 31, 2007 and December 31, 2006, respectively.

    The investment objectives for these arrangements are included in the
modified coinsurance and funds withheld coinsurance agreements. The primary
objective is to maximize current income, consistent with the long-term
preservation of capital. The overall investment strategy is executed within the
context of prudent asset/liability management. The investment guidelines permit
investments in fixed maturity securities, and include marketable securities,
commercial mortgages, private placements and cash. The maximum percentage of
below investment grade securities is 10%, and other guidelines limit risk,
ensure issuer and industry diversification, and maintain liquidity and overall
portfolio credit quality.

    According to data provided by our ceding companies, the following table
reflects the market value of assets including cash backing the funds withheld at
interest portfolio using the lowest rating assigned by the three major rating
agencies.

<TABLE>
<CAPTION>
                                               March 31, 2007        December 31, 2006
                                            ----------------------  -------------------
                                              $ in                    $ in
       Ratings                               millions        %       millions       %
       -------                              ---------    ---------  ---------   -------
<S>                                         <C>           <C>      <C>            <C>
       AAA...............................   $   492.2     26.6%    $   427.5      22.1%
       AA................................       166.2      9.0         166.6       8.6
       A.................................       504.0     27.2         561.1      29.0
       BBB...............................       530.6     28.6         605.6      31.3
       BB or below.......................        62.6      3.4          75.1       3.9
                                            ---------    ------    ---------     ------
                                              1,755.6     94.8       1,835.9      94.9
       Commercial mortgage loans.........        97.1      5.2          98.8       5.1
                                            ---------    ------    ---------     ------
       Total.............................   $ 1,852.7    100.0%    $ 1,934.7     100.0%
                                            =========    ======    =========     ======
</TABLE>


                                       26
<PAGE>

    According to data provided by our ceding companies, the following table
reflects the market value of assets backing the funds withheld at interest
portfolio by sector.

<TABLE>
<CAPTION>
                                               March 31, 2007         December 31, 2006
                                            --------------------  --------------------
                                              $ in                  $ in
       Sector                                millions      %       millions       %
       ------                               ---------  ---------   ---------   -------
<S>                                         <C>          <C>      <C>           <C>
       U.S. Treasury securities and U.S.
        government agency obligations....   $     64.9     3.5%   $     58.8      3.0%
       Corporate securities..............      1,175.5    63.5       1,323.7     68.4
       Municipal bonds...................         29.7     1.6          29.9      1.6
       Mortgage and asset backed
        securities.......................        424.1    22.9         463.4     24.0
       Commercial mortgage loans.........         97.1     5.2          98.9      5.1
       Cash..............................         61.4     3.3         (40.0)    (2.1)
                                            ----------   ------   -----------   ------
       Total.............................   $  1,852.7   100.0%   $  1,934.7    100.0%
                                            ==========   ======   ===========   ======
</TABLE>


Liquidity and Capital Resources

Liquidity

Cash flow

    Net cash provided by operating activities amounted to $134.3 million in the
first quarter ended March 31, 2007 compared to net cash provided by operating
activities of $69.6 million in the first quarter of 2006. Operating cash flow
includes cash inflows from premiums, fees and investment income, and cash
outflows for benefits and expenses paid. In periods of growth of new business,
our operating cash flow may decrease due to first year commissions paid on new
business generated. For income recognition purposes these commissions are
deferred and amortized over the life of the business.

    We believe cash flows from operations will be positive over time. However,
they may be positive or negative in any one period depending on the amount of
new life reinsurance business written, the level of ceding commissions paid in
connection with writing that business, the level of renewal premiums earned in
the period and the timing of receipt of reinsurance receivables and settlement
of reinsurance payables.

    Net cash used in investing activities was $85.7 million in the first quarter
ended March 31, 2007 compared to net cash used in investing activities of $866.8
million in the first quarter of 2006. The decrease in net cash used in investing
activities principally relates to the purchases of fixed maturity securities in
the first quarter of 2006.

    Net cash used in financing activities was $1.4 million in the first quarter
ended March 31, 2007 compared to and net cash provided by financing activities
of $67.1 million in the first quarter of 2006.

The Holding Company

    We are a holding company whose primary uses of liquidity include, but are
not limited to, operating expenses, the immediate capital needs of our operating
companies, dividends paid to our shareholders and interest payments on our
indebtedness. The primary sources of our liquidity include proceeds from our
capital raising efforts and interest income on corporate investments. The
holding company also receives funding from its subsidiaries through transfer
pricing reflecting services performed by the holding company on behalf of its
subsidiaries. We will continue to be dependent upon these sources of liquidity.
Our liquidity position was greatly improved by the closing of the Transaction,
which provided gross proceeds of $600.0 million (see Note 8 to the Financial
Statements).


                                       27
<PAGE>

Capital and Long-Term Debt

    Total capitalization at March 31, 2007 and December 31, 2006 is as follows:

                                                    March 31,      December 31,
                                                      2007            2006
                                                  -----------     ------------
       Shareholders' equity....................   $ 1,122,551     $  1,057,192
       Mezzanine equity........................             -          143,665
       Long-term debt..........................       129,500          129,500
                                                  -----------     ------------
       Total...................................   $ 1,252,051     $  1,330,357
                                                  ===========     ============

    The decrease in shareholders' equity at March 31, 2007 as compared to
December 31, 2006 was primarily due to the net loss available to ordinary
shareholders of $35.5 million for the first quarter of 2007 and the effect of
the adoption of FIN 48 which reduced beginning retained earnings by $32.6
million (see Note 5 to the Consolidated Financial Statements).

Shareholder dividends

    On July 28, 2006, the Board of Directors suspended the dividend on our
ordinary shares. All future payments of dividends are at the discretion of our
Board of Directors and will depend on our income, capital requirements,
insurance regulatory conditions, operating conditions and such other factors as
the Board of Directors may deem relevant.

    In accordance with the forbearance agreement with HSBC (see Collateral
section below), we are prohibited from declaring any cash dividend, exclusive of
the non-cumulative perpetual preferred shares, during the forbearance period
from November 26, 2006 until December 31, 2008, unless at the time of
declaration and payment of cash dividend, Scottish Annuity & Life Insurance
Company (Cayman) Ltd. has an insurer financial strength rating of at least A-
for Standard & Poor's and A3 for Moody's Investors Service.

Collateral

    We must have sufficient assets available for use as collateral to support
our borrowings, letters of credit and certain reinsurance transactions. With
reinsurance transactions, the need for collateral or letters of credit arises in
the following ways:

       o    When Scottish Annuity & Life Insurance Company (Cayman) Ltd.,
            Scottish Re (Dublin) Limited or Scottish Re Limited enter into a
            reinsurance treaty with a U.S. customer, they must contribute assets
            into a qualifying reserve credit trust and/or provide a letter of
            credit to enable the U.S. ceding company to obtain a reserve credit
            for the reinsurance transaction since these companies are not
            licensed or accredited U.S. reinsurers.

       o    When Scottish Re (U.S.), Inc. enters into a reinsurance transaction,
            it typically incurs a need for additional statutory capital to cover
            strain from acquisition costs and increases in required risk-based
            capital. To the degree its own surplus is not sufficient to meet
            this need, we can make an additional capital contribution into
            Scottish Re (U.S.), Inc. or Scottish Re (U.S.), Inc. can cede a
            portion of the transaction to another company within the group or an
            unrelated reinsurance company. If that reinsurer is not a licensed
            or accredited U.S. reinsurer, it must contribute assets to a
            qualifying reserve credit trust and/or provide a letter of credit in
            order for Scottish Re (U.S.), Inc. to obtain reserve credit.
            Scottish Re (U.S.), Inc. has ceded significant amounts of business
            to Scottish Re (Dublin) Limited, relieving Scottish Annuity & Life
            Insurance Company (Cayman) Ltd. of the need to contribute
            substantial amounts of capital to Scottish Re (U.S.), Inc. in
            connection with such cessions by Scottish Re (U.S.), Inc. to
            Scottish Re (Dublin) Limited. Scottish Re (Dublin) Limited must
            contribute eligible assets to qualifying reserve credit trusts
            and/or provide letters of credit to provide Scottish Re (U.S.), Inc.
            with reserve credit.

       o    Scottish Re (U.S.), Inc. and Scottish Re Life Corporation are
            licensed, accredited, approved or authorized to write reinsurance in
            50 states and the District of Columbia. As a result, they generally
            are not required to provide collateral in order for their U.S.
            customers to receive reserve credit; however, Scottish Re (U.S.),
            Inc. may agree to provide a reserve credit trust, security trust,


                                       28
<PAGE>

            or letter of credit to mitigate the counter-party risk from the
            customer's perspective, thereby enabling transactions that otherwise
            would be unavailable or would be available only on significantly
            less attractive terms.

ING Collateral Arrangement

    Pursuant to the terms of our acquisition of the individual life reinsurance
business of ING, ING is obligated to maintain collateral for the Regulation XXX
and AXXX statutory reserve requirements of the acquired business for the
duration of such requirements. We pay ING a fee based on the face amount of the
collateral provided until satisfactory alternative collateral arrangements are
made. In 2005 and 2006, we completed three transactions that collectively
provided approximately $3.7 billion in collateral arrangements to fund
Regulation XXX statutory reserve requirements that were assumed in connection
with the acquisition of ING's individual life reinsurance business. As of March
31, 2007, ING is only providing collateral support for our AXXX business.

HSBC I

    In 2004, we entered into a collateral finance facility with HSBC ("HSBC I").
This facility provides up to $200.0 million that can be used to collateralize
reinsurance obligations under inter-company reinsurance agreements.
Simultaneously, we entered into a total return swap with HSBC under which we are
entitled to the total return of the investment portfolio of the trust
established for this facility. In accordance with Financial Accounting Standards
Board ("FASB") Interpretation No. 46R "Consolidation of Variable Interest
Entities - An Interpretation of ARB No. 51 ("FIN 46R"), the trust is considered
to be a variable interest entity and we are deemed to hold the primary
beneficial interest in the trust. As a result, the trust has been consolidated
in our financial statements. The assets of the trust have been recorded as fixed
maturity investments. Our consolidated statements of income (loss) show the
investment return of the trust as investment income and the cost of the facility
is reflected in collateral finance facilities expense. The creditors of the
trust have no recourse against our general assets. As at March 31, 2007, $188.5
million of this facility was being utilized.

    Due to the rating agency downgrades after our announcement of earnings for
the second quarter of 2006, HSBC requested additional collateral under the total
return swap agreements related to both HSBC I and HSBC II (see below). $65.0
million of additional collateral was provided to HSBC in 2006. On November 26,
2006, we entered into an amended and restated forbearance agreement with HSBC,
pursuant to which HSBC has agreed not to make demands for additional collateral
under our collateral finance facilities with HSBC so long as certain conditions
are met during the forbearance period which ends on December 31, 2008. Shortly
following the closing of the Transaction, $32.5 million of the additional
collateral noted above will be returned to us. The remaining amount will be
returned upon the attainment of an A- credit rating.


Orkney Re, Inc.

    On February 11, 2005, Orkney Holdings, LLC, a Delaware limited liability
company ("Orkney I"), issued and sold in a private offering an aggregate of
$850.0 million Series A Floating Rate Insured Notes due February 11, 2035 (the
"Orkney Notes"). Orkney I was organized for the limited purpose of holding the
stock of Orkney Re, Inc., a special purpose captive insurance company, and
issuing the Orkney Notes. During May 2007, Orkney Re, Inc. was redomiciled from
South Carolina to Delaware. This redomestication had no impact on the Orkney
Notes. Scottish Re (U.S.), Inc. holds all of the limited liability company
interest in Orkney I, and has contributed capital to Orkney I in the amount of
$268.5 million. Proceeds from this offering were used to fund the Regulation XXX
reserve requirements for a defined block of level premium term life insurance
policies issued between January 1, 2000 and December 31, 2003 reinsured by
Scottish Re (U.S.), Inc. to Orkney Re, Inc. Proceeds from the Orkney Notes have
been deposited into a series of trusts that collateralize the notes.

    The holders of the Orkney Notes cannot require repayment from us or any of
our subsidiaries, other than Orkney I. The timely payment of interest and
ultimate payment of principal for the Orkney Notes are guaranteed by MBIA
Insurance Corporation.

    Interest on the principal amount of the Orkney Notes is payable quarterly at
a rate equivalent to three month LIBOR plus 0.53%. At March 31, 2007, the
interest rate was 5.89%. Any payment of principal, including by redemption, or
interest on the Orkney Notes is sourced from dividends from Orkney Re, Inc. and
the balances available in a series of trust accounts. Dividends may only be made
with the prior approval of the Director of


                                       29
<PAGE>

Insurance in accordance with the terms of its licensing orders and in accordance
with applicable law. The Orkney Notes also contain a customary limitation on
lien provisions and customary events of default provisions, which, if breached,
could result in the accelerated maturity of the Orkney Notes. Orkney I has the
option to redeem all or a portion of the Orkney Notes prior to and on or after
February 11, 2010, subject to certain call premiums.

    In accordance with FIN 46R, Orkney I is considered to be a variable interest
entity and we are considered to hold the primary beneficial interest. As a
result, Orkney I has been consolidated in our financial statements. The assets
of Orkney I have been recorded as fixed maturity investments and cash and cash
equivalents. Our consolidated statements of income (loss) show the investment
return of Orkney I as investment income and the cost of the facility is
reflected in collateral finance facilities expense.

Orkney Re II plc

    On December 21, 2005, Orkney Re II plc, an orphan special purpose vehicle
incorporated under the laws of Ireland ("Orkney II"), whose issued ordinary
shares are held by a share trustee and its nominees in trust for charitable
purposes, issued in a private offering $450.0 million of debt to external
investors. The debt consisted of $382.5 million Series A-1 Floating Rate
Guaranteed Notes (the "Series A-1 Notes"), $42.5 million in aggregate principal
amount of Series A-2 Floating Rate Notes (the "Series A-2 Notes"), and $25.0
million Series B Floating Rate Notes (the "Series B Notes"), all due December
31, 2035 (collectively, the "Orkney II Notes"). The Orkney II Notes are listed
on the Irish Stock Exchange. Proceeds from this offering were used to fund the
Regulation XXX reserve requirements for a defined block of level premium term
life insurance policies issued between January 1, 2004 and December 31, 2004
reinsured by Scottish Re (U.S.), Inc. to Orkney II. Proceeds from the Orkney II
Notes have been deposited into a series of trusts that collateralize the notes.

    The holders of the Orkney II Notes cannot require repayment from us or any
of our subsidiaries, only from Orkney II. Assured Guaranty (UK) Ltd. has
guaranteed the timely payment of the scheduled interest payments and the
principal on the maturity date, December 21, 2035, of the Series A-1 Notes.

    The debt issued to Scottish Annuity & Life Insurance Company (Cayman) Ltd.
consisted of $30.0 million of Series C Floating Rate Notes due December 21,
2036. These notes accrue interest only. Payment of interest does not occur until
the Orkney II Notes are fully repaid. Scottish Re Group Limited owns $0.5
million Series D Convertible Notes due December 21, 2036 and 76,190,000
Preference Shares of $1.00 each in capital.

    Interest on the principal amount of the Orkney II Notes is payable quarterly
at a rate equivalent to three-month LIBOR plus 0.425% for the Series A-1 Notes,
three-month LIBOR plus 0.73% for the Series A-2 Notes, and three-month LIBOR
plus 3.0% for the Series B Notes. At March 31, 2007, the interest rate on the
Series A-1 Notes was 5.785%, Series A-2 Notes was 6.09%, and Series B Notes was
8.36%. The Orkney II Notes also contain a customary limitation on lien
provisions and customary events of default provisions, which, if breached, could
result in the accelerated maturity of the Orkney II Notes. Orkney II has the
option to redeem all or a portion of the Orkney II Notes prior to and on or
after February 11, 2007, subject to certain call premiums.

    In accordance with FIN 46R, Orkney II is considered to be a variable
interest entity and we are considered to hold the primary beneficial interest.
As a result, Orkney II has been consolidated in our financial statements. The
assets of Orkney II have been recorded as fixed maturity investments and cash
and cash equivalents. Our consolidated statements of income (loss) show the
investment return of Orkney II as investment income and the cost of the facility
is reflected in collateral finance facilities expense.

HSBC II

    On December 22, 2005, we entered into a second collateral finance facility
with HSBC ("HSBC II"). This facility is a 20 year collateral finance facility
that provides up to $1.0 billion of Regulation XXX collateral support for the
business acquired from ING and can be used to collateralize reinsurance
obligations under inter-company reinsurance agreements. Simultaneously, we
entered into a total return swap with HSBC under which we are entitled to the
total return of the investment portfolio of the trust established for this
facility. In accordance with FIN 46R, the trust is considered to be a variable
interest entity and we are deemed to hold the primary beneficial interest in the
trust. As a result, the trust has been consolidated in our financial statements.
The assets of the trust have been recorded as fixed maturity investments, cash
and cash equivalents. Our consolidated statements of income (loss) show the
investment return of the trust as investment income and the cost of the facility
is reflected in collateral


                                       30
<PAGE>

finance facilities expense. The creditors of the trust have no recourse against
our general assets. As at March 31, 2007, $547.5 million of this facility was
being utilized.

    See HSBC I above for a discussion of the additional collateral paid to HSBC
under this facility.

Reinsurance Facility

    On December 22, 2005, we entered into a long term reinsurance facility
("Reinsurance Facility"), with a third-party Bermuda-domiciled reinsurer that
provides up to $1.0 billion of Regulation XXX collateral support for the
business acquired from ING. The Bermuda reinsurer provides security in the form
of letters of credit in trust equal to the statutory reserves. All risks and
returns arising out of the underlying book of business are retained by us.

Ballantyne Re plc

    On May 2, 2006, Ballantyne Re plc, an orphan special purpose vehicle
incorporated under the laws of Ireland issued in a private offering $1.74
billion of debt to external investors and $178.0 million of debt to Scottish
Annuity & Life Insurance Company (Cayman) Ltd. The total debt issued to external
investors (collectively, the "Notes") consisted of:

       o    $250.0 million of Class A-1 Floating Rate Notes,

       o    $500.0 million of Class A-2 Floating Rate Guaranteed Notes Series A,

       o    $500.0 million of Class A-2 Floating Rate Guaranteed Notes Series B,

       o    $100.0 million of Class A-3 Floating Rate Guaranteed Notes Series A,

       o    $100.0 million of Class A-3 Floating Rate Guaranteed Notes Series B,

       o    $100.0 million of Class A-3 Floating Rate Guaranteed Notes Series C,

       o    $100.0 million of Class A-3 Floating Rate Guaranteed Notes Series D,

       o    $10.0 million of Class B-1 7.51244% Subordinated Notes,

       o    $40.0 million of Class B-2 Subordinated Floating Rate Notes, and

       o    $42.0 million of Class C-1 Subordinated Variable Interest Rate
            Notes.

    The debt issued to Scottish Annuity & Life Insurance Company (Cayman) Ltd.
consisted of $8.0 million of Class C-1 Subordinated Variable Interest Rate Notes
and $170.0 million Class C-2 Subordinated Variable Interest Rate Notes, which
Scottish Annuity & Life Insurance Company (Cayman) Ltd. intends to hold
(collectively, the "SALIC Notes", and together with the Notes, the "Ballantyne
Notes"). Concurrently with its offering of the Ballantyne Notes, Ballantyne Re
issued (i) $500,000 of Class D Convertible Notes, which were purchased by
Scottish Re Group Limited, (ii) 163.0 million Redeemable Preference Shares of
U.S. $1.00 par value per share which were purchased by Scottish Annuity & Life
Insurance Company (Cayman) Ltd., and (iii) 18.2 million Non-Redeemable
Preference Shares of U.S. $1.00 par value per share which were also purchased by
Scottish Annuity & Life Insurance Company (Cayman) Ltd.

    Interest on the principal amount of the Ballantyne Notes is payable in
intervals ranging from every 28 days to monthly to annually, depending on the
note, initially at a rate equivalent to one-month LIBOR plus 0.61% for the Class
A-1 Floating Rate Notes (and after May 2, 2022, one-month LIBOR plus 1.22%),
one-month LIBOR plus 0.31% for the Class A-2 Floating Rate Guaranteed Notes
Series A (and after May 2, 2027, one-month LIBOR plus 0.62%), one-month LIBOR
plus 0.36% for the Class A-2 Floating Rate Guaranteed Notes Series B (and after
May 2, 2027, one-month LIBOR plus 0.72%), 4.99%, 4.99%, 5.00% and 5.01% for
Series A, Series B, Series C, and Series D of the Class A-3 Notes, respectively
(with the rate on the Class A-3 Notes to reset every 28 days), 7.51% for the
Class B-1 Subordinated Notes, one-month LIBOR plus 2.00% for the Class B-2
Subordinated Floating Rate Notes,



                                       31
<PAGE>

and a variable rate based on performance of the underlying block of business for
the Class C-1 Subordinated Variable Interest Rate Notes and the Class C-2
Subordinated Variable Interest Rate Notes.

    Proceeds from this offering were used to fund the Regulation XXX reserve
requirements for the business acquired from ING. $1.65 billion of the proceeds
from the Ballantyne Notes have been deposited into a series of accounts that
collateralize the reserve obligations of Scottish Re (U.S.), Inc.

    The holders of the Ballantyne Notes cannot require repayment from us or any
of our subsidiaries. The timely payment of the scheduled interest payments and
the principal on the maturity date of Series A of the Class A-2 Notes and Series
A, Series B, Series C, Series D and, if issued, Series E of the Class A-3 Notes
has been guaranteed by Ambac Assurance UK Limited. The timely payment of the
scheduled interest payments and the principal on the maturity date of Series B
of the Class A-2 Notes and, if issued, Series F of the Class A-3 Notes has been
guaranteed by Assured Guaranty (UK) Ltd.

    In accordance with FIN 46R, Ballantyne Re is considered to be a variable
interest entity and we are considered to hold the primary beneficial interest.
As a result, Ballantyne Re is consolidated in our financial statements beginning
in the second quarter of 2006. The assets of Ballantyne Re are recorded as fixed
maturity investments and cash and cash equivalents. Our consolidated statements
of income (loss) include the investment return of Ballantyne Re as investment
income and the cost of the facility is reflected in collateral finance
facilities expense.

Stingray

    On January 12, 2005, we entered into a put agreement with Stingray Investor
Trust ("Stingray") for an aggregate value of $325.0 million. Under the terms of
the put agreement, we acquired an irrevocable put option to issue funding
agreements to Stingray in return for the assets in a portfolio of 30 day
commercial paper. This put option may be exercised at any time. In addition, we
may be required to issue funding agreements to Stingray under certain
circumstances, including, but not limited to, the non-payment of the put option
premium and a non-payment of interest under any outstanding funding agreements
under the put agreement. The facility matures on January 12, 2015. This
transaction may also provide collateral for Scottish Re (U.S.), Inc. for
reinsurance obligations under inter-company reinsurance agreements. At March 31,
2007, $50.0 million was in use for this purpose. We drew down most of the funds
available under the facility, in the amount of $265.0 million, during 2006 and
$10.0 million in the first quarter of 2007. The put premium and interest costs
incurred during the three months ended March 31, 2007 amounted to $4.7 million
and is included in collateral finance facilities expense in the consolidated
statements of income (loss). The put premium incurred during the three months
ended March 31, 2006 amounted to $1.2 million. In accordance with FIN 46R, we
are not considered to be the primary beneficiary of Stingray and, as a result,
we are not required to consolidate Stingray. We are not responsible for any
losses incurred by the Stingray Pass Through Trust. The $275.0 million of funds
drawn on the facility are included in interest sensitive contract liabilities on
our consolidated balance sheet.

Collateral Summary

    At March 31, 2007, we had $3.8 billion of collateral finance facility
obligations relating to the HSBC I, HSBC II, Orkney I, Orkney II and Ballantyne
Re transactions. In connection with these transactions, we have assets in trust
of approximately $5.7 billion that represent assets supporting the economic
reserves, excess reserves, additional funding amounts and surplus in the
transactions. The assets in trust are managed in accordance with predefined
investment guidelines as to permitted investments, portfolio quality,
diversification and duration.

    As described above, we have a number of facilities in place to provide
collateral for our reinsurance business, including HSBC I and Stingray. We are
currently in the process of completing an approximately $550.0 million, 15-year
facility that will replace HSBC I and fully finance our 2005 and 2006 new
business Regulation XXX production. In addition, we anticipate using a portion
of the Transaction proceeds to pay-down the $275.0 million outstanding balance
on Stingray and utilizing Stingray for short-term Regulation XXX financing.
Other existing sources of collateral include cash and other assets which are
available, which have been significantly improved with the receipt of the
proceeds from the Transaction.

    During the first quarter of 2007, we entered into a $100 million term loan
facility with MassMutual and Cerberus to provide a source of liquidity between
the shareholder vote of the Transaction and the closing of the Transaction, if
needed. No amounts were drawn on this facility and it was terminated upon the
closing of the Transaction on May 7, 2007.


                                       32
<PAGE>

Regulatory Capital Requirements

    Scottish Annuity & Life Insurance Company (Cayman) Ltd. has agreed with
Scottish Re (U.S.), Inc. that it will (1) cause Scottish Re (U.S.), Inc. to
maintain capital and surplus equal to the greater of $20.0 million or such
amount necessary to prevent the occurrence of a Company Action Level Event under
the risk-based capital laws of the State of Delaware and (2) provide Scottish Re
(U.S.), Inc. with enough liquidity to meet its obligations in a timely manner.

    Scottish Annuity & Life Insurance Company (Cayman) Ltd. has agreed with
Scottish Re Life Corporation that it will (1) cause Scottish Re Life Corporation
to maintain capital and surplus equal to at least 175% of Company Action Level
RBC, as defined under the laws of the State of Delaware and (2) provide Scottish
Re Life Corporation with enough liquidity to meet its obligations in a timely
manner.

    Scottish Annuity & Life Insurance Company (Cayman) Ltd. and Scottish Re
Group Limited have agreed with Scottish Re Limited that in the event Scottish Re
Limited is unable to meet its obligations under its insurance or reinsurance
agreements, Scottish Annuity & Life Insurance Company (Cayman) Ltd. or if
Scottish Annuity & Life Insurance Company (Cayman) Ltd. cannot fulfill such
obligations, then Scottish Re Group Limited will assume all of Scottish Re
Limited's obligations under such agreements.

    Scottish Re Group Limited and Scottish Annuity & Life Insurance Company
(Cayman) Ltd. have executed similar agreements for Scottish Re (Dublin) Limited
and Scottish Re Life (Bermuda) Limited and may, from time to time, execute
additional agreements guaranteeing the performance and/or obligations of their
subsidiaries.

    All of our regulated insurance entities are in excess of their minimum
regulatory capital requirements as of March 31, 2007 and we expect them to
remain as such.

Off Balance Sheet Arrangements

    We have no obligations, assets or liabilities other than those disclosed in
the financial statements; no trading activities involving non-exchange traded
contracts accounted for at fair value; and no relationships and transactions
with persons or entities that derive benefits from their non-independent
relationship with us or our related parties.

New Accounting Standards

FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes

    In July 2006, the FASB issued FASB Interpretation No. 48 ("FIN 48"),
"Accounting for Uncertainty in Income Taxes". FIN 48 prescribes detailed
guidance for the financial statement recognition, measurement and disclosure of
uncertain tax positions recognized in an enterprise's financial statements in
accordance with SFAS No. 109. Tax positions must meet a "more likely than not"
recognition threshold at the effective date to be recognized upon the adoption
of FIN 48 and in subsequent periods. (See Note 5 to the Consolidated Financial
Statements.)

FASB Statement No. 157, Fair Value Measurements

    In September 2006, the FASB issued Statement No. 157 ("SFAS No. 157"), "Fair
Value Measurements", which defines fair value, establishes a framework for
measuring fair value under GAAP and expands disclosures about fair value
measurements. We are required to adopt SFAS No. 157 on January 1, 2008 and are
evaluating the implications of SFAS No. 157 on our results of operations and
financial position.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

    Please refer to Part II "Item 1A: Risk Factors" and "Item 7A: Quantitative
and Qualitative Disclosures about Market Risk" in our 2006 Annual Report.


                                       33
<PAGE>

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

    Our Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on
such evaluation, such officers have concluded that our disclosure controls and
procedures were effective as of March 31, 2007 to ensure that information
required to be disclosed by us in the reports filed and submitted by us under
the Exchange Act were recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms.

Changes in internal controls

    There have not been any changes in our internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated by the SEC
under the Securities Exchange Act of 1934) during our most recently completed
fiscal quarter that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.


                                       34
<PAGE>

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings

    On August 2, 2006, a putative class action lawsuit was filed against us and
certain of our current and former officers and directors in the U.S. District
Court for the Southern District of New York on behalf of a putative class
consisting of investors who purchased our publicly traded securities between
December 16, 2005 and July 28, 2006. Between August 7, 2006 and October 3, 2006,
seven additional related class action lawsuits were filed against us, certain of
our current and former officers and directors, and certain third parties. Two of
the complaints were filed on August 7, 2006, and the remaining five complaints
were filed on August 14, 2006, August 22, 2006, August 23, 2006, September 15,
2006, and October 3, 2006, respectively. Each of the class actions filed seeks
an unspecified amount of damages, as well as other forms of relief. On October
12, 2006, all of the class actions were consolidated. On December 4, 2006, a
consolidated class action complaint was filed. The complaint names us; Dean E.
Miller, our Chief Financial Officer; Scott E. Willkomm, our former Chief
Executive Officer; Elizabeth Murphy, our former Chief Financial Officer; our
Board members Michael Austin, Bill Caulfeild-Browne, Robert Chmely, Michael
French, Lord Norman Lamont, Hazel O'Leary, and Glenn Schafer; and certain third
parties, including Goldman Sachs and Bear Stearns in their capacities as
underwriters in various securities offerings by us and Ernst & Young LLP in
their capacity as independent registered public accounting firm. The complaint
is brought on behalf of a putative class consisting of investors who purchased
our securities between February 17, 2005 and July 31, 2006. The complaint
alleges violations of Sections 10(b) and 20(a) of the Exchange Act, Rule 10b-5,
and Sections 11, 12(a)(2), and 15 of the Securities Act. The complaint seeks an
unspecified amount of damages, as well as other forms of relief. On March 7,
2007 we filed a motion to dismiss the putative class action lawsuit. This motion
is still pending.

    In addition, on or about October 20, 2006, a shareholder derivative lawsuit
was filed against our directors in the U.S. District Court for the Southern
District of New York. The derivative lawsuit alleges, among other things, that
defendants improperly permitted us to make false and misleading statements to
investors concerning our business and operations, thereby exposing us to
liability from class action suits alleging violations of the U.S. securities
laws. The derivative lawsuit asserts claims against defendants for breach of
fiduciary duty, abuse of control, gross mismanagement, constructive fraud, and
unjust enrichment. On January 8, 2007 we filed a motion to dismiss the
derivative lawsuit. On May 7, 2007, our motion was granted and the lawsuit was
dismissed without prejudice. If plaintiffs wish to file an amended complaint,
they must do so within 20 days of the decision.

Item 1A.  Risk Factors

    As a result of the closing of the Transaction, certain risks set forth in
our 2006 Annual Report relating to whether the Transaction would be completed
are no longer applicable. However, the other risks identified could materially
affect our business, results of operations or financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

    Not applicable.

Item 3. Defaults upon Senior Securities

    Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

        We held an Extraordinary General Meeting of Shareholders on March 2,
2007. The following items of business were presented to our shareholders:

Proposal 1: Amendment of Memorandum and Articles of Association

        Our shareholders approved an increase in our authorized share capital
and certain other amendments to our Memorandum and Articles of Association which
are necessary to effect the Transaction. The affirmative vote of 66.67% of our
outstanding ordinary shares entitled to vote was required to approve the
amendments. The results of the vote of our shareholders with respect to this
proposal were as follows:

For:          41,942,429     (69.26% of our outstanding ordinary shares entitled
                             to vote)


                                       35
<PAGE>

Against:       7,232,037     (11.94% of our outstanding ordinary shares entitled
                             to vote)
Abstain:       843,376       (1.39% of our outstanding ordinary shares entitled
                             to vote)

Proposal 2: Issuance of Convertible Shares

        Our shareholders approved the issuance of convertible shares in
connection with the Transaction, which shares are convertible into ordinary
shares representing more than 20% of our outstanding ordinary shares and the
issuance of which will result in a change of control of the Company. The
affirmative vote of greater than 50% of votes cast, provided that the total
votes cast represent over 50% of ordinary shares entitled to vote was required
to approve the issuance. The results of the vote of our shareholders with
respect to this proposal were as follows:

For:           42,055,221    (84.08% of votes cast)
Against:       7,120,248     (14.24% of votes cast)
Abstain:       842,373       (1.68% of votes cast)

Proposal 3: Adjournment of Meeting

        Our shareholders approved a proposal to adjourn the Extraordinary
General Meeting, if necessary, to permit further solicitation of proxies in the
event there were not sufficient votes at the time of the Extraordinary General
Meeting to approve the transactions contemplated at such meeting. The
affirmative vote of greater than 50% of votes cast was required to approve the
adjournment of the meeting. The results of the vote of our shareholders with
respect to this proposal were as follows:

For:           41,986,961    (83.94% of votes cast)
Against:       7,207,227     (14.41% of votes cast)
Abstain:       823,654       (1.65% of votes cast)

    The holders of approximately 1.8 million ordinary shares submitted votes in
favor of proposals one, two and three just after the polls closed. The inclusion
of such shares in the above tally would increase the relevant votes for
proposals one, two and three to 72.25%, 84.64% and 84.5%, respectively.

Item 5. Other Information

    Not applicable.

Item 6. Exhibits

    Except as otherwise indicated, the following Exhibits are filed herewith and
made a part hereof:

3.1    Memorandum of Association of Scottish Re Group Limited, as amended as of
       April 7, 2005 (incorporated herein by reference to Scottish Re Group
       Limited's Current Report on Form 8-K). (6)

3.2    Articles of Association of Scottish Re Group Limited, as amended as of
       April 7, 2005 (incorporated herein by reference to Scottish Re Group
       Limited's Current Report on Form 8-K). (6)

4.1    Specimen Ordinary Share Certificate (incorporated herein by reference to
       Exhibit 4.1 to Scottish Re Group Limited's Registration Statement on Form
       S-1). (1)

4.2    Form of Amended and Restated Class A Warrant (incorporated herein by
       reference to Exhibit 4.2 to Scottish Re Group Limited's Registration
       Statement on Form S-1). (1)

4.3    Form of Securities Purchase Agreement for the Class A Warrants
       (incorporated herein by reference to Exhibit 4.4 to Scottish Re Group
       Limited's Registration Statement on Form S-1). (1)

4.4    Form of Securities Purchase Agreement between Scottish Re Group Limited
       and the Shareholder Investors (incorporated herein by reference to
       Exhibit 4.10 to Scottish Re Group Limited's Registration Statement on
       Form S-1). (1)


                                       36
<PAGE>

4.5    Form of Securities Purchase Agreement between Scottish Re Group Limited
       and the Non-Shareholder Investors (incorporated herein by reference to
       Exhibit 4.12 to Scottish Re Group Limited's Registration Statement on
       Form S-1). (1)

4.6    Certificate of Designations of Convertible Preferred Shares of Scottish
       Re Group Limited (incorporated herein by reference to Scottish Re Group
       Limited's Current Report on Form 8-K). (10)

4.7    Certificate of Designations of Scottish Re Group Limited's Non-Cumulative
       Perpetual Preferred Shares, dated June 28, 2005 (incorporated herein by
       reference to Scottish Re Group Limited's Current Report on Form 8-K).
       (16)

4.8    Specimen Stock Certificate for the Company's Non-Cumulative Perpetual
       Preferred Shares (incorporated herein by reference to Scottish Re Group
       Limited's Current Report on Form 8-K). (16)

10.1   Employment Agreement dated June 18, 1998 between Scottish Re Group
       Limited and Michael C. French (incorporated herein by reference to
       Exhibit 10.1 to Scottish Re Group Limited's Registration Statement on
       Form S-1). (1)(24)

10.2   Second Amended and Restated 1998 Stock Option Plan effective October 22,
       1998 (incorporated herein by reference to Exhibit 10.3 to Scottish Re
       Group Limited's Registration Statement on Form S-1). (1)(24)

10.3   Form of Stock Option Agreement in connection with 1998 Stock Option Plan
       (incorporated herein by reference to Exhibit 10.4 to Scottish Re Group
       Limited's Registration Statement on Form S-1). (1)(24)

10.4   Investment Management Agreement dated October 22, 1998 between Scottish
       Re Group Limited and General Re-New England Asset Management, Inc.
       (incorporated herein by reference to Exhibit 10.14 to Scottish Re Group
       Limited's Registration Statement on Form S-1). (1)

10.5   Form of Omnibus Registration Rights Agreement (incorporated herein by
       reference to Exhibit 10.17 to Scottish Re Group Limited's Registration
       Statement on Form S-1). (1)

10.6   1999 Stock Option Plan (incorporated herein by reference to Exhibit 10.14
       to Scottish Re Group Limited's 1999 Annual Report on Form 10-K). (2)(24)

10.7   Form of Stock Options Agreement in connection with 1999 Stock Option Plan
       (incorporated herein by reference to Exhibit 10.15 to Scottish Re Group
       Limited's 1999 Annual Report on Form 10-K). (2)(24)

10.8   Employment Agreement dated September 18, 2000 between Scottish Re (U.S.),
       Inc. and Oscar R. Scofield (incorporated herein by reference to Exhibit
       10.16 to Scottish Re Group Limited's 2000 Annual Report on Form 10-K).
       (3)(24)

10.9   Share Purchase Agreement by and between Scottish Re Group Limited and
       Pacific Life dated August 6, 2001 (incorporated by reference to Scottish
       Re Group Limited's Current Report on Form 8-K). (7)

10.10  Amendment No. 1, dated November 8, 2001, to Share Purchase Agreement
       dated August 6, 2001 by and between Scottish Re Group Limited and Pacific
       Life (incorporated by reference to Scottish Re Group Limited's Current
       Report on Form 8-K). (5)

10.11  2001 Stock Option Plan (incorporated herein by reference to Exhibit 10.17
       to Scottish Re Group Limited's 2001 Annual Report on Form 10-K). (4)(24)

10.12  Form of Nonqualified Stock Option Agreement in connection with 2001 Stock
       Option Plan (incorporated herein by reference to Exhibit 10.17 to
       Scottish Re Group Limited's 2001 Annual Report on Form 10-K). (4)(24)

10.13  Tax Deed of Covenant dated December 31, 2001 between Scottish Re Group
       Limited and Pacific Life (incorporated by reference to Scottish Re Group
       Limited's Current Report on Form 8-K). (5)


                                       37
<PAGE>

10.14  Letter Agreement dated December 28, 2001 between Scottish Re Group
       Limited and Pacific Life (incorporated by reference to Scottish Re Group
       Limited's Current Report on Form 8-K). (5)

10.15  Form of Indemnification Agreement between Scottish Re Group Limited and
       each of its directors and officers (incorporated by reference to Scottish
       Re Group Limited's Amended Quarterly Report on Form 10-Q/A for the period
       ended September 30, 2002). (8)(24)

10.16  Employment Agreement dated July 1, 2002 between Scottish Annuity & Life
       Insurance Company (Cayman) Ltd. and Thomas A. McAvity, Jr. (incorporated
       by reference to Scottish Re Group Limited's Amended Quarterly Report on
       Form 10-Q/A for the period ended September 30, 2002). (8)(24)

10.17  Employment Agreement dated June 1, 2002 between Scottish Re Group Limited
       and Paul Goldean (incorporated herein by reference to Scottish Re Group
       Limited's Quarterly Report on Form 10-Q for the period ended March 31,
       2004). (14)(24)

10.18  Employment Agreement dated July 1, 2002 between Scottish Re Group Limited
       and Elizabeth Murphy (incorporated by reference to Scottish Re Group
       Limited's Amended Quarterly Report on Form 10-Q/A for the period ended
       September 30, 2002). (8)(24)

10.19  Employment Agreement dated June 1, 2002 between Scottish Re Group Limited
       and Clifford J. Wagner (incorporated by reference to Scottish Re Group
       Limited's Amended Quarterly Report on Form 10-Q/A for the period ended
       September 30, 2002). (8)(24)

10.20  Employment Agreement dated July 8, 2002 between Scottish Re Group Limited
       and Scott E. Willkomm (incorporated by reference to Scottish Re Group
       Limited's Amended Quarterly Report on Form 10-Q/A for the period ended
       September 30, 2002). (8)(24)

10.21  Employment Agreement dated February 10, 2003 between Scottish Re Group
       Limited and Michael C. French (incorporated herein by reference to
       Scottish Re Group Limited's 2002 Annual Report on Form 10-K). (12)(24)

10.22  Employment Agreement dated February 10, 2003 between Scottish Re (U.S.),
       Inc. and Oscar R. Scofield (incorporated herein by reference to Scottish
       Re Group Limited's 2002 Annual Report on Form 10-K). (12)(24)

10.23  Amended Employment Agreement dated February 10, 2003 between Scottish Re
       Group Limited and Thomas A. McAvity (incorporated herein by reference to
       Scottish Re Group Limited's 2002 Annual Report on Form 10-K). (12)(24)

10.24  Indenture, dated November 22, 2002, between Scottish Re Group Limited and
       The Bank of New York (incorporated herein by reference to Scottish Re
       Group Limited's Registration Statement on Form S-3). (9)

10.25  Registration Rights Agreement, dated November 22, 2002, by and among
       Scottish Re Group Limited and Bear Stearns & Co. and Putnam Lovell
       Securities Inc. (incorporated herein by reference to Scottish Re Group
       Limited's Registration Statement on Form S-3). (9)

10.26  Employment Agreement dated May 1, 2003 between Scottish Re Holdings
       Limited and David Huntley (incorporated herein by reference to Scottish
       Re Group Limited's Quarterly Report on Form 10-Q for the period ended
       September 30, 2003). (13)(24)

10.27  Stock Purchase Agreement, dated as of October 24, 2003, by and among
       Scottish Re Group Limited, Scottish Holdings, Inc. and Employers
       Reinsurance Corporation (incorporated herein by reference to Scottish Re
       Group Limited's Current Report on Form 8-K). (11)

10.28  Tax Matters Agreement, dated as of January 22, 2003, by and among
       Scottish Re Group Limited, Scottish Holdings, Inc. and Employers
       Reinsurance Corporation (incorporated herein by reference to Scottish Re
       Group Limited's Current Report on Form 8-K). (11)


                                       38
<PAGE>

10.29  Transition Services Agreement, dated as of January 22, 2003, by and among
       Scottish Holdings, Inc. and Employers Reinsurance Corporation
       (incorporated herein by reference to Scottish Re Group Limited's Current
       Report on Form 8-K). (11)

10.30  Employment Agreement dated April 21, 2004, by and among Scottish
       Holdings, Inc. and Seth W. Vance (incorporated herein by reference to
       Scottish Re Group Limited's Quarterly Report on Form 10-Q for the period
       ended March 31, 2004). (14)(24)

10.31  Amendment to Employment Agreement dated March 29, 2004, by and between
       Scottish Re (U.S.), Inc. and Oscar R. Scofield (incorporated herein by
       reference to Scottish Re Group Limited's Quarterly Report on Form 10-Q
       for the period ended June 30, 2004, filed with the SEC on August 9,
       2004). (24)

10.32  Asset Purchase Agreement, dated as of October 17, 2004, by and among
       Security Life of Denver Insurance Company, Security Life of Denver
       International Limited, ING America Insurance Holdings, Inc. (for purposes
       of Section 11.11), Scottish Re Group Limited, Scottish Re (U.S.), Inc.,
       Scottish Annuity & Life Insurance Company (Cayman) Ltd. (for purposes of
       Section 5.26) and Scottish Re Life Corporation (for purposes of Section
       5.24) (incorporated herein by reference to Scottish Re Group Limited's
       Current Report on Form 8-K). (15)

10.33  Securities Purchase Agreement, dated as of October 17, 2004, by and among
       Scottish Re Group Limited and Cypress Merchant B Partners II (Cayman)
       L.P., Cypress Merchant Banking II-A C.V., 55th Street Partners II
       (Cayman) L.P. and Cypress Side-by-Side (Cayman) L.P. (including form of
       Subordinated Note, Class C Warrant, Shareholders' Agreement and
       Amendments to Articles of Association) (incorporated herein by reference
       to Scottish Re Group Limited's Current Report on Form 8-K). (15) 10.33
       Securities Purchase Agreement, dated as of October 17, 2004, by and among
       Scottish Re Group Limited and Cypress Merchant B Partners II (Cayman)
       L.P., Cypress Merchant Banking II-A C.V., 55th Street Partners II
       (Cayman) L.P. and Cypress Side-by-Side (Cayman) L.P. (including form of
       Subordinated Note, Class C Warrant, Shareholders' Agreement and
       Amendments to Articles of Association) (incorporated herein by reference
       to Scottish Re Group Limited's Current Report on Form 8-K). (15)

10.33  Securities Purchase Agreement, dated as of October 17, 2004, by and among
       Scottish Re Group Limited and Cypress Merchant B Partners II (Cayman)
       L.P., Cypress Merchant Banking II-A C.V., 55th Street Partners II
       (Cayman) L.P. and Cypress Side-by-Side (Cayman) L.P. (including form of
       Subordinated Note, Class C Warrant, Shareholders' Agreement and
       Amendments to Articles of Association) (incorporated herein by reference
       to Scottish Re Group Limited's Current Report on Form 8-K). (15)

10.34  Form of Voting Agreement, by and among Cypress Merchant B Partners II
       (Cayman) L.P., Cypress Merchant Banking II-A C.V., 55th Street Partners
       II (Cayman) L.P. and Cypress Side-by-Side (Cayman) L.P., Scottish Re
       Group Limited and, respectively, each director and each officer of
       Scottish Re Group Limited (incorporated herein by reference to Scottish
       Re Group Limited's Current Report on Form 8-K). (15)

10.35  Voting Agreement, dated as of October 15, 2004, by and among Scottish Re
       Group Limited, Cypress Merchant B Partners II (Cayman) L.P., Cypress
       Merchant Banking II-A C.V., 55th Street Partners II (Cayman) L.P. and
       Cypress Side-by-Side (Cayman) L.P. and Pacific Life Insurance Company
       (incorporated herein by reference to Scottish Re Group Limited's Current
       Report on Form 8-K). (15)

10.36  Letter Agreement, dated as of October 17, 2004, by and among Scottish Re
       Group Limited and Cypress Merchant B Partners II (Cayman) L.P., Cypress
       Merchant Banking II-A C.V., 55th Street Partners II (Cayman) L.P. and
       Cypress Side-by-Side (Cayman) L.P. (incorporated herein by reference to
       Scottish Re Group Limited's Current Report on Form 8-K). (15)

10.37  First Supplemental Indenture, dated as of October 26, 2004, between
       Scottish Re Group Limited and The Bank of New York (incorporated herein
       by reference to Scottish Re Group Limited's Current Report on Form 8-K,
       filed with the SEC on October 29, 2004).

10.38  Amendment to Employment Agreement dated as of March 29, 2004, by and
       among Scottish Re Group Limited and Michael C. French (incorporated
       herein by reference to Scottish Re Group Limited's Quarterly


                                       39
<PAGE>

       Report on Form 10-Q for the quarter ended September 30, 2004, filed with
       the SEC on November 8, 2004). (24)

10.39  Employment Agreement, dated as of March 29, 2004, by and among Scottish
       Re Group Limited and Deborah G. Percy (incorporated herein by reference
       to Scottish Re Group Limited's Quarterly Report on Form 10-Q for the
       quarter ended September 30, 2004, filed with the SEC on November 8,
       2004). (24)

10.40  Employment Agreement, dated as of January 1, 2005, between Scottish
       Holdings, Inc. and Gary Dombowsky (incorporated herein by reference to
       Scottish Re Group Limited's 2004 Annual Report on Form 10-K). (20)(24)

10.41  Amendment to Employment Agreement, dated as of February 7, 2005, between
       Scottish Re Group Limited and Michael C. French (incorporated herein by
       reference to Scottish Re Group Limited's 2004 Annual Report on Form
       10-K). (20)(24)

10.42  Employment Agreement, dated as of February 1, 2005, between Scottish Re
       Group Limited and Hugh T. McCormick (incorporated herein by reference to
       Scottish Re Group Limited's 2004 Annual Report on Form 10-K). (20)(24)

10.43  Employment Agreement, dated as of December 1, 2004, between Scottish
       Holdings, Inc. and Kenneth R. Stott (incorporated herein by reference to
       Scottish Re Group Limited's 2004 Annual Report on Form 10-K). (20)(24)

10.44  Credit Agreement, dated as of December 29, 2004, among Scottish Annuity &
       Life Insurance Company (Cayman) Ltd., Scottish Re (Dublin) Limited,
       Scottish Re (U.S.), Inc., and Scottish Re Limited, as borrowers, Bear
       Stearns Corporate Lending, Inc. and Wachovia Bank, National Association
       as Co-Syndication Agents, Bank of America, N.A., as Administrative Agent
       and L/C Issuer, and The Other Lenders Party Hereto, Banc of America
       Securities LLC, as Sole Lead Arranger and Sole Book Manager (incorporated
       herein by reference to Scottish Re Group Limited's 2004 Annual Report on
       Form 10-K). (20)

10.45  Administrative Services Agreement, dated as of December 31, 2004, between
       Security Life of Denver Insurance Company and Security Life of Denver
       International Limited and Scottish Re (U.S.), Inc. (incorporated herein
       by reference to Scottish Re Group Limited's 2004 Annual Report on Form
       10-K). (20)

10.46  Coinsurance Agreement dated December 31, 2004 between Security Life of
       Denver Insurance Company and Scottish Re (U.S.), Inc. (incorporated
       herein by reference to Scottish Re Group Limited's 2004 Annual Report on
       Form 10-K). (20)

10.47  Coinsurance/Modified Coinsurance Agreement, dated December 31, 2004,
       between Security Life of Denver Insurance Company and Scottish Re (U.S.),
       Inc. (incorporated herein by reference to Scottish Re Group Limited's
       2004 Annual Report on Form 10-K). (20)

10.48  Retrocession Agreement, dated December 31, 2004, between Scottish Re
       (U.S.), Inc. and Security Life of Denver Insurance Company (incorporated
       herein by reference to Scottish Re Group Limited's 2004 Annual Report on
       Form 10-K). (20)

10.49  Retrocession Agreement, dated December 31, 2004, between Scottish Re Life
       (Bermuda) Limited and Security Life of Denver Insurance Company
       (incorporated herein by reference to Scottish Re Group Limited's 2004
       Annual Report on Form 10-K). (20)

10.50  Reserve Trust Agreement, dated as of December 31, 2004, between Scottish
       Re (U.S.) Inc., as Grantor, and Security Life of Denver Insurance
       Company, as Beneficiary, and The Bank of New York, as Trustee, and The
       Bank of New York, as Securities Intermediary (incorporated herein by
       reference to Scottish Re Group Limited's 2004 Annual Report on Form
       10-K). (20)

10.51  Security Trust Agreement, dated as of December 31, 2004, by and among
       Scottish Re (U.S.), Inc., as Grantor, Security Life of Denver Insurance
       Company, as Beneficiary, The Bank of New York, as Trustee, and The Bank
       of New York, as Securities Intermediary (incorporated herein by reference
       to Scottish Re Group Limited's 2004 Annual Report on Form 10-K). (20)


                     40
<PAGE>

10.52  Coinsurance Agreement, dated December 31, 2004, between Security Life of
       Denver International Limited and Scottish Re Life (Bermuda) Limited
       (incorporated herein by reference to Scottish Re Group Limited's 2004
       Annual Report on Form 10-K). (20)

10.53  Coinsurance/Modified Coinsurance Agreement, dated December 31, 2004,
       between Security Life of Denver International Limited and Scottish Re
       Life (Bermuda) Limited (incorporated herein by reference to Scottish Re
       Group Limited's 2004 Annual Report on Form 10-K). (20)

10.54  Coinsurance Funds Withheld Agreement, dated December 31, 2004, between
       Security Life of Denver International Limited and Scottish Re Life
       (Bermuda) Limited (incorporated herein by reference to Scottish Re Group
       Limited's 2004 Annual Report on Form 10-K). (20)

10.55  Reserve Trust Agreement, dated December 31, 2004, between Scottish Re
       Life (Bermuda) Limited, as Grantor, and Security Life of Denver
       International Limited, as Beneficiary. The Bank of New York, as Trustee,
       and The Bank of New York, as Securities Intermediary (incorporated herein
       by reference to Scottish Re Group Limited's 2004 Annual Report on Form
       10-K). (20)

10.56  Security Trust Agreement, dated as of December 31, 2004, by and among
       Scottish Re Life (Bermuda) Limited, as Grantor, Security Life of Denver
       International Limited, as Beneficiary, The Bank of New York, as Trustee,
       and the Bank of New York, as Securities Intermediary (incorporated herein
       by reference to Scottish Re Group Limited's 2004 Annual Report on Form
       10-K). (20)

10.57  Technology Transfer and License Agreement, dated as of December 31, 2004,
       between Security Life of Denver Insurance Company, ING North America
       Insurance Corporation and Scottish Re (U.S.), Inc. (incorporated herein
       by reference to Scottish Re Group Limited's 2004 Annual Report on Form
       10-K). (20)

10.58  Transition and Integration Services Agreement, dated December 31, 2004,
       between Security Life of Denver Insurance Company and Scottish Re (U.S.),
       Inc. (incorporated herein by reference to Scottish Re Group Limited's
       Current Report on Form 8-K). (19)

10.59  Form of Remarketing Agreement, between the Company and Lehman Brothers,
       Inc., as Remarketing Agent (incorporated herein by reference to Scottish
       Re Group Limited's Current Report on Form 8-K). (16)

10.60  Amended and Restated Credit Agreement, dated as of July 14, 2005, among
       Scottish Annuity & Life Insurance Company (Cayman) Ltd., Scottish Re
       (Dublin) Limited, Scottish Re (U.S.), Inc., and Scottish Re Limited, as
       Borrowers, Bear Stearns Corporate Lending, Inc., HSBC Bank USA, National
       Association, and Wachovia Bank, National Association as Syndication
       Agents, Bank of America, N.A., as Administrative Agent and L/C Issuer,
       and the Other Lenders Party Hereto, Banc of America Securities LLC, as
       Sole Lead Arranger and Sole Book Manager (incorporated herein by
       reference to Scottish Re Group Limited's Current Report on Form 8-K).
       (17)

10.61  Scottish Re Group Limited 2004 Equity Incentive Compensation Plan
       (incorporated herein by reference to Scottish Re Group Limited's Proxy
       Statement filed with the SEC on April 1, 2004).

10.62  Amendment No. 1 to Scottish Re Group Limited 2004 Equity Incentive
       Compensation Plan (incorporated herein by reference to Scottish Re Group
       Limited's Current Report on Form 8-K). (18) (22)10.63 Amendment No. 2 to
       Scottish Re Group Limited 2004 Equity Incentive Compensation Plan
       (incorporated herein by reference to Scottish Re Group Limited's Current
       Report on Form 8-K). (18) (22) 10.64 Form of Management Stock Option
       Agreement under the Scottish Re Group Limited 2004 Equity Incentive
       Compensation Plan (incorporated herein by reference to Scottish Re Group
       Limited's Current Report on Form 8-K). (18) (24)

10.65  Form of Management Performance Share Unit Agreement under the Scottish Re
       Group Limited 2004 Equity Incentive Compensation Plan (incorporated
       herein by reference to Scottish Re Group Limited's Current Report on Form
       8-K). (18) (24)

10.66  Form of Management Restricted Share Unit Agreement under the Scottish Re
       Group Limited 2004 Equity Incentive Compensation Plan (incorporated
       herein by reference to Scottish Re Group Limited's Current Report on Form
       8-K). (18) (24)


                                       41
<PAGE>

10.67  Employment Agreement, dated as of July 18, 2005, between Scottish Re
       Group Limited and Dean Miller (incorporated herein by reference to
       Scottish Re Group Limited's Current Report on Form 8-K). (19) (24)

10.68  Letter of Credit Agreement, dated as of August 18, 2005, among Scottish
       Re (Dublin) Limited, as Borrower, Scottish Annuity & Life Insurance
       Company (Cayman) Ltd., as Guarantor, Bank of America, N.A., as
       Administrative Agent and L/C Issuer, and the Other Lenders Party Hereto,
       and Bank of America Securities LLC, as Sole Lead Arranger and Sole Book
       Manager (incorporated herein by reference to Scottish Re Group Limited's
       Current Report on Form 8-K). (21)

10.69  Amendment to Employment Agreement, dated as of October 29, 2006, between
       Scottish Re Group Limited and Paul Goldean (incorporated herein by
       reference to Scottish Re Group Limited's Current Report on Form 8-K which
       was filed with the SEC on November 2, 2006). (24)

10.70  Securities Purchase Agreement, dated as of November 26, 2006, by and
       among Scottish Re Group Limited, MassMutual Capital Partners LLC and SRGL
       Acquisition, LLC (incorporated herein by reference to Scottish Re Group
       Limited's Current Report on Form 8-K). (22)

10.71  Form of Registration Rights and Shareholders Agreement (incorporated
       herein by reference to Scottish Re Group Limited's Current Report on Form
       8-K). (22)

10.72  Voting Agreement, dated as of November 26, 2006, by and among Scottish Re
       Group Limited, MassMutual Capital Partners LLC, SRGL Acquisition, LLC,
       Cypress Merchant B Partners II (Cayman) L.P., Cypress Merchant B II-A
       C.V., Cypress Side-By-Side (Cayman) L.P. and 55th Street Partners II
       (Cayman) L.P. (incorporated herein by reference to Scottish Re Group
       Limited's Current Report on Form 8-K). (22)

10.73  First Amendment to Asset Purchase Agreement, dated as of November 26,
       2006, by and among Scottish Re (U.S.), Inc., Scottish Re Life (Bermuda)
       Limited, Security Life of Denver Insurance Company and Security Life of
       Denver International Limited (incorporated herein by reference to
       Scottish Re Group Limited's Current Report on Form 8-K). (22)

10.74  Letter Agreement, dated as of November 30, 2006, by and among Scottish
       Annuity & Life Insurance Company (Cayman) Ltd., Scottish Re Limited and
       Comerica Bank (incorporated herein by reference to Scottish Re Group
       Limited's Current Report on Form 8-K). (23)

10.75  Standby Letter of Credit Application and Agreement, dated as of November
       30, 2006, by and between Scottish Annuity & Life Insurance Company
       (Cayman) Ltd. and Comerica Bank (incorporated herein by reference to
       Scottish Re Group Limited's Current Report on Form 8-K). (23)

10.76  Standby Letter of Credit Application and Agreement, dated as of November
       30, 2006, by and between Scottish Re Limited and Comerica Bank
       (incorporated herein by reference to Scottish Re Group Limited's Current
       Report on Form 8-K). (23)

10.77  Amendment No. 2 to Securities Purchase Agreement, dated as of February
       20, 2007, by and among Scottish Re Group Limited, MassMutual Capital
       Partners LLC and SRGL Acquisition, LDC (incorporated herein by reference
       to Scottish Re Group Limited's Current Report on Form 8-K which was filed
       with the SEC on February 21, 2007).

10.78  Amendment Three to the 2004 Equity Incentive Compensation Plan. (24)

31.1   Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2   Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
       Section 906 of the Sarbanes-Oxley Act of 2002.

32.2   Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
       Section 906 of the Sarbanes-Oxley Act of 2002.


                                       42
<PAGE>

       (1)   Scottish Re Group Limited's Registration Statement on Form S-1 was
             filed with the SEC on June 19, 1998, as amended.

       (2)   Scottish Re Group Limited's 1999 Annual Report on Form 10-K was
             filed with the SEC on April 3, 2000.

       (3)   Scottish Re Group Limited's 2000 Annual Report on Form 10-K was
             filed with the SEC on March 30, 2001.

       (4)   Scottish Re Group Limited's 2001 Annual Report on Form 10-K was
             filed with the SEC on March 5, 2002.

       (5)   Scottish Re Group Limited's Current Report on Form 8-K was filed
             with the SEC on December 31, 2001.

       (6)   Scottish Re Group Limited's Current Report on Form 8-K was filed
             with the SEC on June 2, 2005.

       (7)   Scottish Re Group Limited's Current Report on Form 8-K was filed
             with the SEC on August 9, 2001.

       (8)   Scottish Re Group Limited's Amended Quarterly Report on Form 10-Q/A
             was filed with the SEC on August 8, 2002.

       (9)   Scottish Re Group Limited's Registration Statement on Form S-3 was
             filed with the SEC on January 31, 2003, as amended.

       (10)  Scottish Re Group Limited's Current Report on Form 8-K was filed
             with the SEC on December 17, 2003.

       (11)  Scottish Re Group Limited's Current Report on Form 8-K was filed
             with the SEC on January 6, 2004.

       (12)  Scottish Re Group Limited's 2002 Annual Report on Form 10-K was
             filed with the SEC on March 31, 2003.

       (13)  Scottish Re Group Limited's Quarterly Report on Form 10-Q was filed
             with the SEC on August 12, 2003.

       (14)  Scottish Re Group Limited's Quarterly Report on Form 10-Q was filed
             with the SEC on May 10, 2004.

       (15)  Scottish Re Group Limited's Current Report on Form 8-K was filed
             with the SEC on October 21, 2004.

       (16)  Scottish Re Group Limited's Current Report on Form 8-K was filed
             with the SEC on July 1, 2005.

       (17)  Scottish Re Group Limited's Current Report on Form 8-K was filed
             with the SEC on July 18, 2005.

       (18)  Scottish Re Group Limited's Current Report on Form 8-K was filed
             with the SEC on August 8, 2005.

       (19)  Scottish Re Group Limited's Current Report on Form 8-K was filed
             with the SEC on August 4, 2005.

       (20)  Scottish Re Group Limited's 2004 Annual Report on Form 10-K was
             filed with the SEC on March 18, 2005.


                                       43
<PAGE>

       (21)  Scottish Re Group Limited's Current Report on Form 8-K was filed
             with the SEC on August 22, 2005.

       (22)  Scottish Re Group Limited's Current Report on Form 8-K as filed
             with the SEC on November 29, 2006.

       (23)  Scottish Re Group Limited's Current Report on Form 8-K was filed
             with the SEC on December 1, 2006.

       (24)  This exhibit is a management contract or compensatory plan or
             arrangement.



SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                    SCOTTISH RE GROUP LIMITED

Date: May 10, 2007                       By: /s/ Paul Goldean
                                         --------------------
                                           Paul Goldean
                                           President and Chief Executive Officer

Date: May 10, 2007                       By: /s/ Dean E. Miller
                                         ----------------------
                                           Dean E. Miller
                                           Chief Financial Officer



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