NEW YORK (Reuters) ? Scottish Re Group Ltd.?s recent ratings downgrades could seriously cut into its future earnings prospects, should the recent experience of other insurers provide any example.

Several reinsurers have closed doors after last year?s brutal hurricane season spurred high claims and ratings downgrades.

Scottish Re is in a different segment of the reinsurance market from those companies, but after earnings warnings and executive departures spurred rating cuts last week, the reinsurer may have trouble winning new business and keeping its current customers, analysts said.

Scottish Re last week reported a second quarter net loss of $123.9 million and gave earnings warnings for the third and fourth quarters.

?With a reinsurer one of the main things they are selling is their financial strength; so if anybody loses faith in that, regardless of the reason, it can impair them going forward,? said Richard Sbaschnig, an analyst with Oppenheimer & Co. Inc. who follows the life reinsurance sector and doesn?t own any Scottish Re shares.

Sarah Lubman, an outside spokeswoman for Scottish Re, on Monday said she couldn?t comment beyond the company?s announcements last week.

Scottish Re said on a conference call on Friday that none of its major customers showed any signs of leaving the firm, but several property-casualty reinsurers which have had their ratings cut this year have not fared so well.

Reinsurers provide cover that can bail out insurers when they most need help ? when claims start piling up from the policies they have sold to individuals and corporations.

In fact, when a reinsurer?s ratings fall below the ?A? range, many customers can break their contracts. Last week, Scottish Re?s financial strength rating from A.M. Best was cut to ?B-double-plus? from ?A-minus,? and Fitch, Moody?s and Standard & Poor?s also cut the company?s ratings below the crucial ?A? range. ?For reinsurers, if they drop below a certain rating, it is very difficult for them to write business on a go-forward basis,? Sbaschnig said.

Maintaining a minimum A-minus rating from A.M. Best is crucial for most insurers, Sbaschnig said. A.M. Best is an Oldwick, New Jersey-based ratings firm which the majority of major insurers and reinsurers retain to assign credit ratings, and A-minus is the fourth-highest rating.

Quanta Capital Holdings, Pxre Group Ltd. and Alea Group Holdings Ltd., suffered from big hurricane claim losses, followed by cuts to their ?A-minus? financial strength ratings.

After the cuts, Pxre?s shares fell as much as 67 percent, Quanta?s shares fell 40 percent, and last September Alea?s fell 8 percent on the day its rating was cut.

All are still trading well below pre-cut levels and each has asked the rating agencies to remove credit ratings, a common practice for insurers that lose their ?A-minus? rating.

In the months since, each company has watched customer numbers dwindle. Pxre, in a May regulatory filing, said 65 percent of its contracts had been cancelled or not renewed and its prospects for business for the rest of the year looked slim. Quanta, also in a May filing, said it had seen a ?significant loss of business opportunities? from its downgrade.

Both Quanta and Alea have now closed their insurance and reinsurance operations to new business.

That?s why investors are clearly concerned about Scottish Re the company?s shares rose 4 percent on Monday, but are still less than half where they were before last week?s announcements. Bear Stearns on Monday upgraded Scottish Re to ?peer perform? from ?underperform.?

?The recent plunge in the shares of Scottish Re highlights the vulnerability of reinsurers to ratings downgrades,? Kathleen Shanley, an insurance analyst at Gimme Credit, wrote in an investor note on another reinsurer.