NEW YORK, Sept. 1, 2006 (PRIMEZONE) -- Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) ("Pomerantz") reminds investors of Scottish Re Group Ltd. ("Scottish Re" or the "Company") (NYSE:SCT) that a class action lawsuit has been filed in the United States District Court Southern District of New York, against the company and certain officers. The class action was filed on behalf of purchasers of the common stock of the Company during the period from February 17, 2005 -- July 28, 2006, inclusive (the "Class Period"). The complaint alleges violations of Section 10(b) and Section 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder.
Scottish Re is a Cayman Islands corporation that engages in the reinsurance of life insurance, annuities and annuity-type products. The Complaint alleges that that in 2003 and 2004, the Company acquired the "book of business" of ING's annuity contracts, as well as life and health insurance contracts from a GE subsidiary. The quality of both of these portfolios was extremely poor. Indeed, in the case of the ING transaction, Scottish Re was actually paid to purchase the portfolio. In connection with these transactions, Scottish Re recognized substantial deferred tax assets, value of which was dependent upon the Company's ability to generate an expected stream of income from premiums being paid by the customers who initially purchased the annuities and insurance. Despite the clearly poor quality of the acquired portfolios, Scottish Re recklessly inflated the expected income from the underlying policies, and failed to adequately account for the likelihood of significant lapses in the policies, which would cause the income stream to halt.
The complaint also alleges that as a result of this reckless misconduct, the Company's reported income during the Class Period that was materially inflated. On July 28, 2006 Scottish Re disclosed that due to significant lapse rates experienced with these policies, and the material inflation of income streams that were supposed to be generated, the Company was compelled to write down $112 million of assets related to these policies, and reported a loss of over $130 million. Additionally the Company stated that it would suspend its ordinary share dividend and "that it had engaged Goldman Sachs and Bear Stearns to assist with evaluating strategic alternatives and potential sources of capital." In response to these revelations, the Company's stock fell $12.01 per share, loosing approximately 72% of its value in one day on extremely high volume of over 32 million share traded, to close at $3.99 per share.
If you purchased the securities of Scottish Re during the Class Period, you have until October 2, 2006 to ask the Court to appoint you as lead plaintiff for the Class. Lead plaintiffs must meet certain legal requirements. Shareholders outside the United States may also join the action, regardless of where they live or which exchange was used to purchase the securities. If you wish to review a copy of the Complaint, to discuss this action, or have any questions, please contact Teresa L. Webb (tlwebb@pomlaw.com) or Carolyn S. Moskowitz (csmoskowitz@pomlaw.com) of the Pomerantz Firm at 888.476.6529 (or 888.4-POMLAW), toll free. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
The Pomerantz Firm, which has offices in New York, Chicago and Washington, D.C., is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. For more information about the Firm, visit our web site at www.pomlaw.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca