We plan to increase our leased office space in Charlotte to meet our growth needs arising from the acquisition of ERC Life. We believe that the leases for our remaining operations are adequate to meet our needs for the foreseeable future.
Operating expenses consist of salary and salary related expenses, legal and professional fees, rent and office expenses, travel and entertainment, directors' expenses, insurance and other similar expenses, except to the extent capitalized in deferred acquisition costs.
Income from continuing operations for the year ended December 31, 2002 increased 93% to $33.2 million from $17.2 million in 2001. The increase in 2002 is attributable to the inclusion of Scottish Re Holdings Limited for the first time since its acquisition, continued growth in our Life Reinsurance North America operations, and an increase in investment income primarily due to the increase in average invested assets. The contribution to net income from continuing operations by Scottish Re Holdings Limited amounted to $12.7 million for the year ended December 31, 2002. The increase in income from continuing operations was offset in part by an increase in realized losses on fixed maturity investments and unit-linked securities, and by losses incurred in our Wealth Management and Other segments. Realized losses were $10.8 million for the year ended December 31, 2002, compared to realized losses of
During the year ended December 31, 2003, realized losses amounted to $4.4 million in comparison with realized losses of $10.8 million in the same period in 2002. Realized losses recognized in the year ended December 31, 2001 amounted to $3.9 million.
Our targeted maximum corporate retention in our Life Reinsurance North America segment on any one life is $1 million, however, we currently retrocede any liability in excess of $500,000. Our targeted maximum corporate retention per life in our Life Reinsurance International segment is $250,000. In addition, we maintain catastrophe cover on our entire retained life reinsurance business, which provides reinsurance for losses of $19.3 million in excess of $750,000. This catastrophe cover includes protection for nuclear, biological and chemical risks.
The following table shows our contractual obligations and commitments including our payments due by period:
In July 2003, the Accounting Standards Executive Committee issued Statement of Position 03-01 ("SOP"), "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Insurance Contracts and for Separate Accounts". This SOP provides guidance on accounting and reporting by insurance enterprises for certain nontraditional long-duration contracts and for separate accounts and is effective for financial statements for fiscal years beginning after December 15, 2003. At the date of initial application of this SOP, we are required to make various determinations, such as qualification for separate account treatment, classification of securities in separate account arrangements, significance of mortality and morbidity risk, adjustments to contract holder liabilities, and adjustments to estimated gross profits as defined in SFAS No. 97, "Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments". We do not believe the implementation of this SOP will have a material effect on our financial statements.