Annuity and Life Re (Holdings), Ltd. yesterday reported a net loss of $205,690 or one cent a share for the third quarter of 2006 compared to a net loss of $2.62 million or 11 cents a share for the same period in 2005.

For the first nine months of the 2006 financial year, Annuity Re said it had lost $1.21 million or five cents a share compared to a loss of $3.94 million or 16 cents a share for the same period in 2005.

Total stockholder?s equity at September 30 was $44,677,410.

Annuity Re said it had net realised investment losses for the third quarter of 2006 of $73,795 compared with net realised investment gains of $99,506 in the same 2005 period. Net realised losses for the nine month period ended September 30, 2006 amounted to $1.13 million compared to a net realised gain of $500,650 for same period in 2005.

Annuity said it was continuing to defend an arbitration proceeding instituted by Transamerica against it concerning an agreement to novate certain reinsurance contracts to Transamerica effective December 31, 2004.

It said Transamerica was requesting security of $30 million from Annuity for the proceedings, meaning Annuity would be left with just $2 million in unencumbered capital. A decision is expected shortly.

Annuity also said reinsurance agreements that it had with Scottish Re Life Corp. and which were novated to Transamerica were part of the Transamerica arbitration claim, and Annuity said it had been told Scottish Re?s reinsurance settlements for 2004 and 2005 were incorrect and Scottish Re was making corrections.

?These corrections indicate that the Company may have received overpayments of premiums and / or may not have been billed for claims for which it may be responsible.

?In October 2006, Scottish Re provided a summary of those corrections. Approximately $10 million would be owed by the Company for the period prior to the novation of the business to Transamerica. (It appears that most of this amount is included in Transamerica?s arbitration claim against the Company.)

? The Company has not been provided any data or back-up in order to validate the corrections and no additional liability has been established at this time.

?The Company cannot predict the timing or magnitude of any required adjustments related to the Scottish Re treaty, nor the impact these adjustments may have on its financial position.?

Similarly, Scottish Re has made adjustments to its billing methodology for 2004 and 2005 that indicate.

?Annuity may have received overpayments of premiums and/or may not have been billed for claims for which it was responsible.

?In October 2006, Scottish Re provided a summary of the adjustments it has made.

? Approximately $10 million would be related to the period prior to the novation. (It appears that most of these adjustments are included in Transamerica?s arbitration claim.)

?The Company has not been provided any data or back-up in order to validate the adjustments and no additional liability has been established at this time.

?The Company cannot predict the timing or magnitude of any required adjustments related to the Scottish Re treaty, nor the impact these adjustments may have on its financial position,? Annuity said.