A.M. Best Upgrades Ratings for Scottish Re and Its Subsidiaries; Outlook Stable.OLDWICK, N. J. -- A.M. Best Co. has upgraded the financial strength rating (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ) to B+ (Good) from B (Fair) and the issuer credit ratings (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) to "bbb-" from "bb+" for the primary operating insurance subsidiaries of Scottish Re Group Limited (Scottish Re) (Cayman Islands) [NYSE NYSE See: New York Stock Exchange : SCT Sacrococcygeal teratoma (SCT) A tumor occurring at the base of the fetus's tailbone. Mentioned in: Prenatal Surgery ]. A.M. Best has also upgraded the ICR to "bb-" from "b" and the various debt ratings of Scottish Re. All ratings have been removed from under review with positive implications and assigned a stable outlook. (See below for a detailed list of the ratings.) These rating actions follow the completion of the previously announced agreement in which MassMutual Capital Partners, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control and Cerberus Capital Management, LP each would invest $300 million into Scottish Re. Under the agreement, Scottish Re will issue convertible preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. , which is the equivalent of a 68.7% ownership interest in the company. The capital investment is permanent and enables Scottish Re to meet both its short-term and longer-term capital and cash flow needs. A.M. Best notes the support demonstrated by its new ownership and expects financial and risk management controls will improve as a result of this change. Capital levels at the insurance entities currently support a "Secure" rating. However, Scottish Re recorded a substantial loss in 2006 on both a statutory and GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis. Moreover, A.M. Best expects that improvement in earnings may be slow to emerge in the near term, as costs related to operational and corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. measures are incurred. In addition, rebuilding its brand in the reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. market will likely take time. The generation of new business has been negatively impacted by rating downgrades and Scottish Re's financial difficulties, and retention of current treaties will need to be monitored. Operating leverage also remains at a high level. The stable outlook reflects A.M. Best's opinion that Scottish Re will benefit from the discipline from its new Board of Directors and the stability provided by its investors. A.M. Best will closely monitor the profit emergence of its inforce business as well as the ability to generate new business profitably. The FSR has been upgraded to B+ (Good) from B (Fair) and the ICRs to "bbb-" from "bb+" for the following subsidiaries of Scottish Re Group Limited: * Scottish Annuity & Life Insurance Company (Cayman) Ltd. * Scottish Re (U.S.), Inc. * Scottish Re Life Corporation * Scottish Re Limited * Orkney Re, Inc. The ICR has been upgraded to "bb-" from "b" for Scottish Re Group Limited The following debt ratings have been upgraded: Scottish Re Group Limited-- -- to "b" from "ccc+" on $125 million non-cumulative preferred shares Stingray stingray: see ray. stingray or whip-tailed ray Any of various species (family Dasyatidae) of rays noted for their slender, whiplike tail with barbed, usually venomous spines. Pass-thru Trust-- -- to "bbb-" from "bb" on $325 million 5.902% senior secured pass-thru certificates, due 2012 The following indicative ratings for debt securities have been upgraded: Scottish Re Group Limited-- -- to "bb-" from "b" on senior unsecured debt -- to "b+" from "b-" on subordinated debt -- to "b" from "ccc+" on preferred stock -- Scottish Holdings Statutory Trust II and III-- -- to "b+" from "b-"on preferred securities Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com. |
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