The departure of Scottish Re's CEO kick-started a downward spiral.
Another month, another reinsurer suffers an ignominious downgrade. This time it was life reinsurer Scottish Re.
The first murmurings of trouble came on 31 July 2006 when CEO and president Scott Willkomm announced his resignation, leading many to speculate. The company also announced it expected a net operating loss of approximately $130m for the second quarter. Share prices dropped the same day and two days later Scottish Re lost its coveted “A” range financial strength rating. AM Best downgraded it to “B++” from “A-” and the other rating agencies followed suit. It has since been downgraded further, with its rating currently at “BBB-”.
AM Best said it had concerns about the magnitude of the $130m loss and the potential for further deterioration in the company's operating performance. Also that it had concerns with Scottish Re's aggressive acquisition strategy. Lastly, it noted Willkomm's unexpected resignation.
“The results for the quarter are a sharp departure from our original projections and estimates provided to our stakeholders,” admitted Paul Goldean, Scottish Re's interim CEO.
Since then, rumours have surrounded the company, with some reports suggesting Hannover Re is considering a bid for the struggling organisation.