ANNUITY AND LIFE RE (HOLDINGS), LTD.

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                 (U.S. dollars)

 

                                         September 30, 2004  December 31, 2003

    Assets                                  (unaudited)

 

    Cash and cash equivalents                 $56,933,773        $80,068,310

    Fixed maturity investments at fair

     value (amortized cost of

     $81,880,490 and $115,594,199 at

     September 30, 2004 and

     December 31, 2003)                        83,287,548        117,812,445

    Funds withheld at interest                596,544,390        667,824,819

    Accrued investment income                   1,033,470          1,491,170

    Receivable for reinsurance ceded           82,627,663         88,480,172

    Other reinsurance receivables               3,656,664          4,580,745

    Deferred policy acquisition costs          95,787,457         68,942,628

    Other assets                                  752,990            682,050

 

         Total Assets                        $920,623,955     $1,029,882,339

 

    Liabilities

 

    Reserves for future policy benefits      $151,673,217       $161,105,541

    Interest-sensitive contracts

     liability                                621,979,101        670,717,546

    Other reinsurance liabilities              15,381,098         55,826,940

    Accounts payable and accrued expenses       5,519,109          7,059,733

 

         Total Liabilities                    794,552,525        894,709,760

 

    Stockholders' Equity

 

    Preferred shares (par value $1.00;

     50,000,000 shares

     authorized; no shares outstanding)               --                  --

    Common shares (par value $1.00;

     100,000,000 shares

     authorized; 26,395,928 and

     26,454,195 shares outstanding

     at September 30, 2004 and

     December 31, 2003)                        26,395,928         26,454,195

    Additional paid-in capital                334,041,944        334,418,029

    Stock warrants                              1,350,000       1,250,000.00

    Unamortized stock-based compensation         (781,376)        (1,509,022)

    Accumulated other comprehensive

     income                                     1,038,094          1,840,849

    Accumulated deficit                      (235,973,160)      (227,281,472)

         Total Stockholders' Equity           126,071,430        135,172,579

 

         Total Liabilities and

          Stockholders' Equity               $920,623,955     $1,029,882,339

 

 

                       ANNUITY AND LIFE RE (HOLDINGS), LTD.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                         (Unaudited and in U.S. dollars)

 

                        For the Three Months Ended For the Nine Months Ended

                              September 30,              September 30,

                            2004         2003         2004          2003

    Revenues

 

    Net premiums          $9,906,337  $28,657,263  $34,565,859   $148,586,899

    Investment income,

     net of related

     expenses              4,780,211   16,250,225   17,875,012     30,143,651

    Net realized

     investment (losses)

     gains                   (84,868)     (52,025)     456,172      6,508,019

    Net change in fair

     value of embedded

     derivatives             565,939    2,808,427    1,692,113     14,845,749

    Surrender fees and

     other revenues        1,024,405    1,667,997    3,609,905      6,061,022

 

    Total Revenues        16,192,024   49,331,887   58,199,061    206,145,340

 

    Benefits and

     Expenses

 

    Claims and policy

     benefits              5,669,394   19,075,004   24,683,101    178,589,650

    Interest credited to

     interest-sensitive

     products              5,513,653    7,642,151   10,865,545     16,731,452

    Policy acquisition

     costs and other

     insurance expenses    5,693,745   22,796,448   18,529,269    119,928,722

    Operating expenses     2,410,937    3,605,189   12,446,874     15,873,678

 

    Total Benefits and

     Expenses             19,287,729   53,118,792   66,524,789    331,123,502

 

    Loss before

     cumulative effect

     of a change in

     accounting

     principle            (3,095,705)  (3,786,905)  (8,325,728)  (124,978,162)

    Cumulative effect of

     a change in

     accounting

     principle                    --           --     (365,960)            --

    Net Loss             $(3,095,705) $(3,786,905) $(8,691,688) $(124,978,162)

 

    Loss per common

     share before

     cumulative effect

     of a change in

     accounting

     principle per

     common share

 

                  Basic       $(0.12)      $(0.15)      $(0.32)        $(4.83)

 

                  Diluted     $(0.12)      $(0.15)      $(0.32)        $(4.83)

 

    Cumulative effect of

     a change in

     accounting

     principle per

     common share

 

                  Basic         $-           $-         $(0.01)          $-

 

                  Diluted       $-           $-         $(0.01)          $-

 

    Net loss per common

     share

 

                  Basic       $(0.12)      $(0.15)      $(0.33)        $(4.83)

 

                  Diluted     $(0.12)      $(0.15)      $(0.33)        $(4.83)

 

 

                       ANNUITY AND LIFE RE (HOLDINGS), LTD.

                 CONSOLIDATED STATEMENTS OF SEGMENT INCOME (LOSS)

                         (Unaudited and in U.S. dollars)

 

                          Life        Annuity

     Three Months

     Ended September

     30, 2003         Reinsurance   Reinsurance    Corporate    Consolidated

 

     Revenues          $30,013,563   $19,107,200     $211,124     $49,331,887

     Benefits and

      Expenses          29,434,795    22,548,719    1,135,278      53,118,792

 

     Segment Income

      (Loss)              $578,768   $(3,441,519)   $(924,154)    $(3,786,905)

 

     Total Assets     $273,604,371  $730,598,264  $77,216,650  $1,081,419,285

 

     Fully Diluted

      Earnings per

      Share                  $0.02        $(0.13)      $(0.04)         $(0.15)

 

     Three Months

      Ended September

      30, 2004

 

     Revenues          $10,620,367    $5,026,576     $545,081     $16,192,024

     Benefits and

      Expenses           8,016,909     9,781,795    1,489,025      19,287,729

 

     Segment Income

      (Loss)            $2,603,458   $(4,755,219)   $(943,944)    $(3,095,705)

 

     Total Assets     $197,754,315  $642,979,101  $79,890,539    $920,623,955

 

     Fully Diluted

      Earnings per

      Share                  $0.10        $(0.18)      $(0.04)         $(0.12)

 

     Nine Months

      Ended September

      30, 2003

 

     Revenues         $147,690,979   $50,977,130   $7,477,231    $206,145,340

     Benefits and

      Expenses         231,596,707    95,353,065    4,173,730     331,123,502

 

     Segment (Loss)

      Income          $(83,905,728) $(44,375,935)  $3,303,501   $(124,978,162)

 

     Total Assets     $273,604,371  $730,598,264  $77,216,650  $1,081,419,285

 

     Fully Diluted

      Earnings per

      Share                 $(3.25)       $(1.71)       $0.13          $(4.83)

 

     Book Value per

      share                                                             $5.39

 

     Nine Months

      Ended September

      30, 2004

 

     Revenues          $35,750,909   $19,948,919   $2,499,233     $58,199,061

     Benefits and

      Expenses          32,238,504    24,584,137    9,702,148      66,524,789

 

     Segment Income

      (Loss) before

      cumulative

      effect of a

      change in

      accounting

      principle         $3,512,405   $(4,635,218) $(7,202,915)    $(8,325,728)

     Cumulative

      effect of a

      change in

      accouting

      principle                 --      (365,960)          --        (365,960)

     Segment Income

      (Loss)            $3,512,405   $(5,001,178) $(7,202,915)    $(8,691,688)

 

     Total Assets     $197,754,315  $642,979,101  $79,890,539    $920,623,955

 

     Fully Diluted

      Earnings per

      Share                  $0.13        $(0.19)      $(0.27)         $(0.33)

 

     Book Value per

      share                                                             $4.78