HAMILTON, Bermuda, Nov. 14 /PRNewswire-FirstCall/ -- Scottish Re Group Limited (NYSE:SCT) today issued the following response to actions taken by Standard & Poor's Rating Services ("S&P") on November 14, 2006.
Paul Goldean, Chief Executive Officer of Scottish Re Group Limited, stated, "We are perplexed by this action given the amount of information provided to S&P regarding our current operations, liquidity and strategic process." "Since August, we have provided S&P with regular updates on our progress. Most recently, within the past week, we provided S&P with a review of the details regarding our discussions with each of the remaining parties involved in the strategic process. We believe the information provided to S&P should have led them to conclude that we are on track to complete the strategic process, as was stated in our press release of November 9, 2006. It is unfortunate that S&P decided to act now rather than allow the remaining parties to complete their confirmatory due diligence, which we expect to occur as early as next week." Dean Miller, Chief Financial Officer of Scottish Re Group Limited, added his comments with respect to the banking facility, "We strongly disagree with S&P's assertion that there has been only slow progress toward the goal of eliminating the credit facility. S&P has been advised that there are numerous alternatives currently available to us to resolve the restricted payment issue before the December 6, 2006 deadline. In fact, we have reduced the outstanding balance under the bank credit facility from $61.4 million at August 14, 2006 to $25.3 million at November 9, 2006, as stated in our third quarter 2006 Form 10Q. In addition, $9.8 million of the remaining $25.3 million relates to subsidiaries of ING for which we have ING's commitment to facilitate a timely resolution. Another $11.6 million of outstanding letters of credit are in the final stages of being replaced by qualifying reserve credit trusts with our clients. These reserve credit trusts require various legal documentation and a review of the adequacy of the investments placed in trust. Our clients are being very supportive of our need to terminate their existing letters of credit, but appropriate time is required to complete this process. Any remaining letters of credit not replaced by reserve credit trusts can be handled with replacement letters of credit issued by a financial institution. As a final alternative, we can request the clients to draw on the letters of credit, which will require us to provide the bank group with the assets to terminate the letters of credit." "S&P reported that the holding company downgrade reflects the Company's tight liquidity referred to in the third quarter 2006 Form 10Q, wherein we stated we risk running out of liquidity as early as the end of the second quarter of 2007. S&P's precipitous action was largely based on questions about the Company's ability to repay the convertible notes. It should be noted that the statement in the Form 10Q was based on a liquidity analysis that included the repayment of the convertibles due on December 6, 2006." "We have been working on various alternatives to solve this issue in the best interests of our clients, the bank group, the Company and the parties involved in the strategic process. S&P did not provide sufficient warning that a downgrade was imminent, and thus, we were unable to accelerate any of our actions to address their concern over the timing of such actions. We are confident that the alternatives described above will enable us to terminate the bank credit facility, thereby eliminating the restricted payment provision and allowing us the ability to repay the $115 million convertible notes when due on December 6, 2006." Mr. Goldean stated, "I wish to assure our shareholders and other stakeholders that we believe the Company remains on track to complete the strategic process in the next few weeks. Notwithstanding this unfortunate rating agency action late in the process, we will not be diverted from our critical path to resolve the issues facing the Company in a manner that is in the best interest of all shareholders." About Scottish Re Scottish Re Group Limited is a global life reinsurance specialist. Scottish Re has operating businesses in Bermuda, Grand Cayman, Guernsey, Ireland, Singapore, the United Kingdom and the United States. Its flagship operating subsidiaries include Scottish Annuity & Life Insurance Company (Cayman) Ltd. and Scottish Re (U.S.), Inc. Scottish Re Capital Markets, Inc., a member of Scottish Re Group Limited, is a registered broker dealer that specializes in securitization of life insurance assets and liabilities. Additional information about Scottish Re Group Limited can be obtained from its Web site, http://www.scottishre.com/.
Forward Looking Statement Certain statements included herein are "forward-looking statements" within the meaning of the federal securities laws. The management of Scottish Re Group Limited (the "Company") cautions that forward-looking statements are not guarantees and actual results could differ materially from those expressed or implied in the forward-looking statements. Important events that could cause the actual results of operations or financial condition of the Company to differ include, but are not necessarily limited to, the Company's ability to attract clients and generate business; the competitive environment; the Company's ability to underwrite business; mortality risk; surrender risk; investment risk (including asset value risk, reinvestment risk and disintermediation risk); the impact of unforeseen economic changes (such as changes in interest rates, currency exchange rate, inflation rates, recession and other external economic factors); the impact of terrorist activities on the economy, the insurance and related industries in general and the Company in particular; regulatory changes (such as changes in U.S. tax law and insurance regulation which directly affect the competitive environment for the Company's products); changes in expectations regarding future realization of gross deferred tax assets; uncertainties about our ability to raise equity capital or other sources of liquidity; rating agency policies and practices; and loss of key executives. Investors are also directed to consider the risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission.
Contact:
Brunswick Group
(212) 333-3810
DATASOURCE: Scottish Re Group Limited CONTACT: Brunswick Group for Scottish Re Group Limited, +1-212-333-3810 Web site: http://www.scottishre.com/
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