Bermuda insurer Annuity and Life Re announced it has suffered a loss of nearly $40 million following the attacks on the United States on September 11.

The company was only marginally impacted by the acts of terrorism, and was hit hard by two programmes written in its first year of business.

The company reported a net operating loss (excluding realised gains/losses on investments) for the quarter ended September 30, 2001 of $39,905,000 or $1.55 per share.

This compares with operating income of $11,603,000 or $0.42 per share for the quarter ended September 30, 2000.

Lawrence S. Doyle, President and Chief Executive Officer, said: "While we dealt with some tough issues in the third quarter, we are keeping our focus on profit and growth. At this stage of our development we have completed 74 major reinsurance programs with over 139 contracts.

"Unfortunately two of the programs written in our first year have resulted in a large loss. We completed 15 new contracts in the third quarter, compared to 8 in the third quarter of last year."

He added that the company's expense ratio decreased to 3.0 percent of total revenue and the company crossed the $100 billion dollar threshold of insurance in force.

He added: "As reinsurance markets begin to adapt to the tragic events of September 11, we will utilise our strong capital base, unique competitive advantages, and disciplined underwriting to continue our profitable growth."

The company reported net loss for the nine months ended September 30, 2001 was $13,909,000 or $0.54 per share compared to net income of $26,537,000 or $0.97 per share for the comparable prior year period ended September 30, 2000.

Total revenue for the quarter ending September 30, 2001 grew 41 percent to $97,445,000, compared to $69,320,000 for the quarter ending September 30, 2000.

The net operating loss for the quarter ending September 30, 2001 is due to a $12.0 million charge related to the tragedy of September 11th, a $24.7 million write down of deferred acquisition costs in our annuity business, and a $10.0 million charge for adverse mortality experience on a life reinsurance contract underwritten in 1998.

Operating income for the nine months ended September 30, 2001 was similarly impacted.

The company said that with respect to the write off of deferred acquisition costs management intends to pursue appropriate action to recover damages from the ceding company.

The company's Board of Directors authorised a $25 million share repurchase programme.

Annuity and Life Re (Holdings), Ltd. provides annuity and life reinsurance to insurers through its wholly owned subsidiaries, Annuity and Life Reassurance, Ltd. and Annuity and Life Re America.