We currently lease office space in Hamilton, Bermuda where our executive and principal offices are located, and in Charlotte, North Carolina, Denver, Colorado, George Town, Grand Cayman, and Windsor, England. Our life reinsurance business operates out of the Bermuda, Grand Cayman, Charlotte, Denver and Windsor offices while our wealth management business operates out of the Grand Cayman office. The Bermuda lease expires in 2005, the Grand Cayman lease expires in 2006, the Denver lease expires in 2010, with an additional five year option, the Charlotte lease expires in 2012, and the Windsor lease expires in 2023.
Our premiums earned are recorded generally in accordance with information received from our ceding companies, or are estimated where this information is not current with the reporting period. These premium estimates are based on historical experience as adjusted for current treaty terms and other information. Actual results could differ from these estimates. Management monitors actual experience, and should circumstances warrant, will revise its estimates of premiums earned.
The change in value of derivatives, net of related deferred amortization costs, arises from the application of DIG B36. During the year ended December 31, 2004 this amounted to a gain of $4.6 million. This change in value arose principally because of an increase in risk free interest rates. DIG B36 was implemented at October 1, 2003. The change in value of the embedded derivatives during the period from October 1, 2003 to December 31, 2003 amounted to a gain of $13.9 million. The gain arose from an increase in the risk free rates.
Claims and other policy benefits in our Life Reinsurance North America Segment increased by 87% to $171.7 million in the year ended December 31, 2003 from $91.8 million in 2002. The increase is as a result of the increased number of clients and the increase in our traditional solutions business from these clients as previously
Investment income arises in the Other Segment on capital not specifically allocated to the Life Reinsurance North America or Life Reinsurance International Segments. Investment income will increase or decrease as we
Management reviews securities with material unrealized losses and tests for "other than temporary impairments" on a quarterly basis. Factors involved in the determination of impairment include fair value as compared to amortized cost, length of time the value has been below amortized 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. We review all investments with fair values less than amortized cost, and pay particular attention to those that have traded continuously at less than 80% of amortized cost for at least six months or 90% of amortized cost for at least 12 months and other assets with material differences between amortized cost and fair value. Investments meeting those criteria are analyzed in detail for "other than
In the table below are the total returns earned by our portfolio for the year ended December 31, 2004, 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. We believe that this customized index is a more relevant benchmark for our portfolio's performance.
o if the average closing price during that period is less than or equal to $19.32, 1.294 ordinary shares.
(iii) $41,282,479 aggregate principal amount of 7.00% Convertible Junior Subordinated Notes with a maturity date 30 years from issuance.
During 2004, we paid quarterly dividends totaling $7.1 million or $0.20 per share. During 2003, we paid quarterly dividends totaling $6.2 million or $0.20 per share. During 2002, we paid quarterly dividends totaling $5.0 million or $0.20 per share.
We have a number of facilities in place to provide the collateral required for our reinsurance business.
by Scottish Annuity & Life Insurance Company (Cayman) Ltd. upon not less than 35 nor more than 65 days prior notice. The Funding Agreements are unsecured obligations of Scottish Annuity & Life Insurance Company (Cayman) Ltd. and will mature in 2015.
Under the terms of the Orkney Notes Policy, MBIA Insurance Corporation may direct JPMorgan Chase Bank, N.A., as trustee, under an indenture (the "Orkney Indenture") among Orkney Holdings, LLC, Scottish Re (U.S.), Inc., JPMorgan Chase Bank, N.A., as trustee, and MBIA Insurance Corporation, to foreclose on certain accounts of Orkney Re, Inc. (the "Orkney Collateral") securing the Orkney Notes Policy if any of the following events of default occurs:
o uncertainties arising from control of our invested assets by third parties;
o the risk that we do not receive shareholder approval for new shares to be issued to The Cypress Group;