Moody's rates Scottish Re convertibles Ba1

Moody's Investors Service said it has assigned a Ba1 rating to the $115 million offering of hybrid capital units (mandatory convertible security) issued by Scottish Re Group Ltd. (formerly Scottish Annuity & Life Holdings, Ltd.).

Moody's outlook is stable.

Moody's said the hybrid capital units consist of a share purchase contract for Scottish Re's ordinary shares in three years and a convertible preferred share redeemable on May 21, 2007. The convertible shares will be remarketed on Feb. 9, 2007 at which time the coupon may be increased.

Commenting on key rating elements that factored into its decision to assign a Ba1 rating to the convertible securities, Moody's noted the company's solid anticipated interest coverage (between 7 and 10 times interest coverage expected in 2004), as well as its good capital position, high quality investment portfolio, experienced management, and diversified book of assumed quota share life reinsurance.

Offsetting these strengths is the company's relatively small size compared to the leading reinsurers, the company's concentrated exposure under certain financial reinsurance transactions, and the rapid growth of the company.

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