Fitch lowers Scottish Re

Fitch Ratings said it downgraded Scottish Re Group Ltd.'s issuer default rating BBB- from BBB.

Other ratings lowered include Scottish Re's 4.5% $115 million senior convertible notes to BB+ from BBB-, 5.875% $142 million hybrid capital units to BB from BB+, 7.25% $125 million non-cumulative perpetual preferred stock downgraded to BB from BB+.

Fitch said the ratings action reflects Fitch's heightened concern over the increased stress placed on financial flexibility of the holding company following Scottish Re's announcements Monday. The announced writedown of the deferred tax asset by $112 million, as well as the impact on new business production of subsequent rating downgrades, are expected to further pressure the company's earnings performance going forward.

Fitch said it believes that the company has adequate liquidity over the near term and its capital position, as measured by risk adjusted capital is within ratings expectations.

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