Moody's confirms Scottish Re

Moody's Investors Service said it confirmed Scottish Re Group Ltd.'s (senior unsecured shelf of provisional Ba3) ratings with a positive outlook. The action follows the completion of a $600 equity investment transaction in which Scottish Re sold a majority stake to MassMutual Capital Partners LLC. The agency also confirmed with a positive outlook the Baa3 insurance financial strength rating of the company's core insurance subsidiaries, Scottish Annuity & Life Insurance Co. (Cayman) Ltd. and Scottish Re.

The agency also said it continues its review for downgrade on the unwrapped notes issued by Orkney Re II, plc. The unwrapped notes issued by Orkney Re II include $42.5 million of 30-year series A-2 floating-rate notes (Aa2); and $30 million of 30-year series B floating-rate notes (Baa2).

The series B floating-rate notes of Orkney Re II remain especially vulnerable to downgrade, primarily due to their subordination to the step-up in guarantor fees in the cash flow waterfall, Moody's said.

The major challenge for Scottish is regaining the confidence of cedants so that it can write meaningful amounts of new business. If the company cannot do so, it is effectively in runoff, the agency said.

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