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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - FEBRUARY 25, 2004 12:00 AM (EST)
A.M. Best Co. has assigned indicative ratings of "bbb-" senior debt, "bb+" subordinated debt and "bb" preferred stock to Scottish Re Group Ltd's (Scottish Re) [NYSE: SCT] (Cayman Islands) $750 million shelf registration. A.M. Best has also assigned a debt rating of "bb+" to trust preferred securities, which may be issued by Scottish Holdings Statutory Trust II and III and are special purpose vehicles. Additionally, A.M. Best has affirmed all existing debt ratings. The outlook for all the ratings is stable.
The proceeds from this offering-which may include common shares/preferred shares-will be used to support growth in the company's core operating subsidiaries and for general corporate purposes. Subsequent to any debt offerings under the shelf registration, A.M. Best does not expect Scottish Re's financial leverage to exceed 25%. Its current interest coverage is favorable at about seven times.
Scottish Re's operating fundamentals and capitalization are sound, enhanced by conservative investment management practices, improving earnings, strong growth in new reinsurance business and geographic diversification achieved primarily through its Windsor, England-based subsidiary, Scottish Re Limited.
Although A.M. Best views current capitalization as strong, Scottish Re is experiencing rapid growth, having acquired 95% of ERC Life Reinsurance Corp. (Jefferson City MO), which doubled the group's life insurance in-force. Accordingly, A.M. Best expects the risk-based capital ratios of Scottish Re's insurance subsidiaries to decline over the medium term and may require additional capital support from the parent. Moreover, A.M. Best believes Scottish Re may be challenged to achieve greater scale as it operates in the highly competitive life reinsurance marketplace where much larger, established players have significant competitive advantages.
The following ratings have been affirmed:
Scottish Re Group Limited-
- "bbb-" on $115 million 4.5% senior unsecured convertible notes, due 2022
- "bb" on $132.2 million 5.875% of hybrid capital units, due 2007
The following indicative ratings for debt securities under the shelf registration have been assigned:
Scottish Re Group Limited-
- "bb" on preferred stock
- "bb+" on subordinated debt
- "bbb-" on senior unsecured debt
- Scottish Holdings Statutory Trust II and III-"bb+" on preferred securities
For current Best's Ratings, independent data and analysis on more than 470 reinsurance companies, please visit Best's Reinsurance Center.
For a list of A.M. Best's current debt ratings, please visit Best's Debt Rating Center.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.