Officials at the U.S. Securities and Exchange Commission want a Bermuda reinsurer to change the way it accounts for the effects of a conversion of convertible preferred shares.

The SEC sent the company, Scottish Re Group Ltd., Hamilton, Bermuda, a letter stating that the company should have deducted about $121 million attributable to the May 7 conversion when calculating net loss available to ordinary shareholders for the purposes of earnings per share, according to Scottish Re.

The change would have no effect on net income figures for the first half of the year or on the total shareholders’ equity figure reported for June 30, Scottish Re says.

But making this accounting change would result in “a reduction in basic income per ordinary share of $1.46 to a basic loss per ordinary share of [30 cents] for the three months ended June 30, 2007,” Scottish Re says.

Scottish Re “continues to communicate with the SEC and to conduct the review necessary to respond appropriately to all of the comments in the SEC’s letter,” Scottish Re says in a statement about the letter.

“The company has not yet responded to the SEC’s letter and therefore … cannot provide any guarantee the SEC will concur with the company’s approach to responding to any of the SEC’s comments,” Scottish Re says.

Scottish Re has filed a Form 8-K indicating that it will refile its Form 10-Q for the quarter ended June 30.