Independent auditors reviewing the financial statements of Annuity and Life Re (Holdings) Ltd for 2021 and 2022 have issued an adverse opinion, stating that they do not present fairly the company’s consolidated financial position.

Holdings was incorporated under the laws of Bermuda on December 2, 1997. Its principal activity is that of investment holding.

The financial statements include the accounts of Holdings and its wholly owned subsidiary, Annuity and Life Reassurance Ltd, a Class C insurer.

In notes to the consolidated financial statements, under the heading “Summary of Significant Accounting Policies”, the company wrote: “The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America with the exception of the non-consolidated of a subsidiary entity, Multivir Inc.”

It added: “The company values the investment in Multivir Inc at fair value.”

Setting out the “significant accounting policies”, Holdings wrote under the heading “Basis of consolidation”: “The consolidated financial statements include the accounts of Holdings and ALRE. All significant intercompany accounts and transactions have been eliminated upon consolidation. The consolidated financial statements do not include the accounts of Multivir Inc as this investment is fully impaired in the financial statement as of December 2022 (2021 — fully impaired) and the company has documented plans to dispose this investment.”

But in an independent auditor’s report addressed to the shareholders and directors of Annuity and Life Re (Holdings) Ltd, the Bermuda office of Grant Thornton set out the basis for its adverse opinion.

It wrote: “In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of our report, the accompanying consolidated financial statements do not present fairly the consolidated financial position of Annuity and Life Re (Holdings) Ltd as of December 31, 2022 and 2021, and the results of its operations and its cashflows for the years then ended in accordance with accounting principles generally accepted in the United States of America.”

Under the heading “Basis for Adverse Opinion”, Grant Thornton wrote: “As described in Note 2(a), Annuity and Life Re (Holdings) Ltd has not consolidated the financial statements of subsidiary Multivir Inc because the investment is fully impaired in the group’s consolidated financial statements and the group has documented plans to dispose of this investment.

“This investment is therefore accounted for on a fair-value basis by the company. Under accounting principles generally accepted in the United States of America and relevant legislation, the subsidiary should have been consolidated because it is controlled by the company.

“Had Multivir Inc been consolidated, many elements in the accompanying consolidated financial statements would have been materially affected. The effects on the consolidated financial statements of the failure to consolidate have not been determined.”

Grant Thornton added: “On April 29, 2022, Arthur Morris & Company Limited provided an unqualified audit opinion on the financial statements for the year ended December 31, 2021.

“We have considered the non-consolidation of an investee company where the company holds the majority of the voting capital and do not believe that it meets the condition for exemption from consolidation and that it should be consolidated in these financial statements.

“Our audit opinion is therefore different from that previously provided on the financial statements for the year ended December 31, 2021.”

The independent auditor’s report and the consolidated financial statements were included in a filing with the Bermuda Stock Exchange.