Fitch Downgrades Scottish Re's Ratings; Remains on Watch Evolving.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has downgraded Scottish Re Group Ltd.'s (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 ) ratings as follows: Scottish Re Group Ltd. -- Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) to 'B+' from 'BB'; -- Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. to 'B-' from 'B+'; 'RR6' Recovery Rating (RR) Assigned. Operating subsidiaries: -- Insurer Financial Strength (IFS) to 'BB+' from 'BBB'. All ratings remain on Rating Watch Evolving. (See the complete listing of all ratings at the bottom of this page.) The ratings action follows SCT's release of earnings for the fourth quarter of 2006 which highlight the business and operating challenges and uncertainties that SCT continues to face. Excluding one-time items, run-rate operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before capacity is significantly below Fitch's ratings expectations. Of note was the significant impact of higher than estimated retrocession RETROCESSION, civil law. When the assignee of heritable rights conveys his rights back to the cedent, it is called a retrocession. Erskine, Prin. B. 3, t. 5, n. 1; Dict. do Jur. h.t. costs, as well as adverse mortality and lapse experience. Additional items such as lower new business profits, and higher financing and collateral costs can be attributed to SCT liquidity issues and ratings downgrades in the summer and fall of 2006. The rating action reflects Fitch's heightened concern that the pending agreement with MassMutual Capital Partners LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control and Cerberus Capital Management, L.P.(MassMutual/Cerberus) could be called off due to further deterioration in SCT's business position and earnings profile as discussed in the above-mentioned earnings release. The ratings remain on Rating Watch Evolving reflecting the pending MassMutual/Cerberus agreement, which is expected to result in a new equity investment into the company of $600 million. The successful close of that agreement would alleviate near-term concerns for collateral financing in 2007, is expected to have a positive impact on SCT's business prospects and franchise, and may result in an upgrade in the ratings assigned to SCT and its affiliates sometime shortly following the close of the transaction. If the transaction does not close, Fitch expects that the ratings of the holding company would be downgraded to a level no higher than 'CC' and the IFS ratings would be downgraded to no higher than 'CCC'. The following ratings have been downgraded and remain on Rating Watch Evolving: Scottish Annuity & Life Insurance Company (Cayman) Limited -- IFS downgraded to 'BB+' from 'BBB'. Scottish Re (U.S.) Inc. -- IFS downgraded to 'BB+' from 'BBB'. Scottish Re Limited -- IFS downgraded to 'BB+' from 'BBB'. Scottish Re Group Limited -- IDR downgraded to 'B+' from 'BB'; -- 7.25% US$125 million non-cumulative perpetual preferred stock downgraded to 'B-' from 'B+'; 'RR6' Assigned. Fitch's Recovery Ratings (RR) are a relative indicator of creditor recovery prospects on a given obligation within an issuers' capital structure in the event of a default. A broad overview of Fitch's RR methodology as it relates to specific sectors can be found at www.fitchratings.com/recovery. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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