Via Facsimile and U.S. Mail
Mail Stop 6010
December 22, 2005
Scott E. Willkomm
Chief Executive Officer and
President
Scottish Re Group Limited
Crown House, Third Floor
4 Par-la-Ville Road
Hamilton, HM 12, Bermuda
Re: Scottish Re Group Limited
Form 10-K for the Fiscal Year Ended December 31, 2004
Filed March 18, 2005
File Number: 001-16855
Dear Mr. Willkomm:
We have limited our review of your filing to the issues we
have
addressed in our comments. In our comments, we ask you to provide
us
with additional information so we may better understand your
disclosures. After reviewing this information, we may raise
additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the Fiscal Year Ended December 31, 2004
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
Critical Accounting Policies, page 38
1. We note that the Company sets its reserves for future policy
benefits based primarily on historical experience and information
provided by ceding companies. Please provide us in disclosure-
type
format disclosure relating to your critical accounting estimate of
this uncertainty, including the risks associated with making
estimates, and the effects and expected effects of the uncertainty
on
financial position and results of operations. In provide us this
disclosure, please consider the following:
a. The dollar amount of reserves recorded based on information
received from the cedants and the nature and extent of the
information received from the cedants related to policies, claims,
unearned premiums and reserves for future policy benefits. ;
b. The time lag from when claims are reported to the cedant to
when
the cedant reports them to you and whether, how and to what extent
this time lag effects your reserve estimate;
c. The amount of any backlog related to the processing of assumed
reinsurance information, whether the backlog has been reserved for
in
the financial statements and, if applicable, when the backlog will
be
resolved;
d. What process management performs to determine the accuracy and
completeness of the information received from the cedants;
e. How management resolves disputes with cedants and how often
disputes occur;
f. How management uses the information received from the cedants
in
its determination of its assumed reserves, and whether reinsurance
intermediaries are used to transact and service reinsurance
policies
and how that impacts your reserving methodology, and
g. Whether management uses historical loss information to validate
its existing reserves and/or as a means of noticing unusual trends
in
the information received from the cedants.
2. We believe your disclosure regarding the estimate of assumed
premium on your reinsurance business could be improved to better
explain the judgments and uncertainties surrounding this estimate
and
the potential impact on your financial statements. Accordingly,
provide us the following information in disclosure-type format to
help us evaluate the adequacy of your disclosure:
a. Discuss the key assumptions used to arrive at management`s best
estimate of the assumed premium estimate and what specific factors
led management to believe this amount is the most realistic.
b. Disclose if any provision for doubtful accounts is recorded
related to the assumed premium estimate, and if not, why
management
believes all amounts recorded will be collectible.
3. Please provide us in disclosure-type format a robust discussion
of
the factors effecting estimation of your future benefit
liabilities
and to show the quantitative and qualitative impact that
reasonably
likely changes in one or more factors would have on reported
results,
financial position and liquidity.
Liquidity and Capital Resources, page 56
4. Please provide us in disclosure-type format expanded
disclosures
regarding your asset/liability management process and whether
there
are any significant variations between the maturity of your
investments and the expected payment of your loss reserves. Also
please include a discussion and analysis of known trends and
uncertainties.
5. Quantify for us your cash flows from discontinued operations
and
explain why they are not disclosed separately in the Consolidated
Statements of Cash Flows or in MD&A.
Contractual Obligations and Commitments, page 65
6. Please provide us a revised table that presents reserves for
future policy benefits on a gross basis.
Consolidated Financial Statements
Notes to Consolidated Financial Statements
Note 19. Mezzanine equity, page 110
7. Please tell us how you determined that the HyCUs should not be
classified as a liability under SFAS 150. We note that the
convertible preferred shares are mandatorily redeemable but please
clarify whether they are conditionally redeemable. Also, in the
first sentence, please clarify for us that HyCUs are Hybrid
Capital
Units.
Note 22. Taxation
8. Tell us why you have not provided disclosure of income before
income tax expense as either domestic or foreign and the amount
applicable to domestic income taxes and foreign income taxes.
Refer
to Rule 4-08(h) of Regulation S-X.
* * * *
Please provide us the additional information requested within
10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your response that keys your
response to our comments Detailed cover letters greatly
facilitate
our review. Please file your letter on EDGAR under the form type
label CORRESP.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in your letter, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Vanessa Robertson, Staff Accountant, at
(202)
551-3649 or Lisa Vanjoske, Assistant Chief Accountant, at (202)
551-
3614 if you have any questions regarding the comments. In this
regard, do not hesitate to contact me, at (202) 551-3679.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief Accountant
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Scott E. Willkomm
Scottish Re Group Limited
December 22, 2005
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