Poor results for the fourth quarter of 2006 have increased uncertainty about the future of Scottish Re Group Ltd.
Scottish Re, Hamilton, Bermuda, has been trying persuade its investors that it is in poor enough financial shape that investors should vote for a financing deal that will greatly dilute existing shareholders’ stake in the company.
Securities analysts say Scottish Re’s latest quarterly results look bad to them.
“While we expected a lot of noise this quarter, what we got was still an eye opener–enough so that we don’t think investors can or should ignore results,” John Nadel, an analyst in the New York office of Fox-Pitt, Kelton, writes in a comment on the results.
One silver lining is that the results could push shareholders who have been on the fence toward voting for the proposed financing transaction because the deal “is likely the only way to sustain some value for the common shareholders,” Nadel writes.
Scottish Re is reporting a net loss of $232 million for the fourth quarter of 2006 on $668 million in revenue, compared with $61 million in net income on $675 million in revenue for the fourth quarter of 2005.
Scottish Re reported a total of $377 million in net losses for 2006.