Troubled reinsurer Scottish Re has delayed by one week an extraordinary meeting of shareholders to vote on a take-over of the business after another twist in its downward fortunes following fourth quarter losses of $231.6 million.

Within hours its financial strength rating was downgraded from BBB to BB+ by the Fitch agency.

Its shares tumbled $1.03, more than 23 percent, on Wall Street yesterday after the company revealed the extent of its financial peril. It suffered a net loss of $368.3m in 2006.

Without a take-over or some other sizeable financial injection Scottish Re will have a mere $2 million of liquidity within a year and that is projected to snowball into a $650 million deficit by 2014.

There is a blunt choice for shareholders, according to the company?s Bermuda-based executives ? either approve a $600 million joint take-over by US companies MassMutual and Cerebus or seek bankruptcy and insolvency protection.

If shareholders reject the take-over option the Fitch agency predicts the Scottish Re group will spiral into a netherworld of ?CC? and ?CCC? ratings.

Shareholders were due to have voted on the take-over at the Fairmont Hamilton Princess Hotel tomorrow, but have now been given an extra week to mull matters over. The reason for the delay to March 2 is to allow adequate consideration of a late decision by Scottish Re to agree a $68.5 million indemnity for MassMutual/Cerebus ? should they be approved the majority owners ? to provide protection against adverse mortality within Scottish Re?s life insurance policy sector. A five percent higher than expected mortality in the company?s North America life assurance business was partially to blame for its unexpectedly bad fourth-quarter results. Scottish Re has businesses registered in various countries and jurisdictions including an executive office in Par-La-Ville, Hamilton, and also Grand Cayman, Guernsey, Ireland, Singapore, England and Wales and the US but not, despite its name, in Scotland.

The ratings downgrade from Fitch was foreshadowed during a ?listen only? Wednesday morning conference call by CEO Paul Goldean and chief financial officer Dean Miller. ?Without a transaction such as MassMutual/Cerberus, further rating downgrades are certain. The rating agencies have also indicated that simply raising additional capital will not result in an increase in our ratings. This was a significant consideration in evaluating a potential rights offering,? said Mr. Goldean.

?An increase in our ratings is critical not only in order to write new business but more importantly for us to be able to successfully to complete financing facilities in order to meet our significant collateral. ?If the MassMutual/Cerebrus transaction or a similar transaction is not completed in the very near term the company will have no alternative but to seek protection under applicable bankruptcy and insolvency laws almost immediately.?

Mr. Goldean concluded: ?2006 was a difficult year for all the stakeholders of ScottishRe. With the closing the MassMutual/Cerebrus transaction we look forward to returning our full attention of the company to our reinsurance business to regain our former status as one of the industries leading participants.?

The Scottish Re share price, which was at around $25 in 2005, has tumbled in line with the business?s financial woes. Poor first-quarter 2006 results led to a management postponement of a planned $200 million capital raising senior note offering until hoped for better second quarter results were released. But shortly before the release of second-quarter net operating losses of $130.3 million, CEO Scott Willkomm and North American operations CEO Seth Vance resigned. Rating agency downgrades followed and HSBC in the US made a demand for $270 million of collateral.

As its liquidity became further strained, a way out of the financial straits was proposed with an auction process for potential bidders to acquire control of the reinsurer.

MassMutual/Cerebrus were one of two bidders who eventually submitted transaction proposals. In November an agreement was entered into with MassMutual and Cerebrus with a proposed $600 million transaction resulting in the partnership gaining 68.7 percent voting equity in the company.

That deal will now be either accepted or rejected by shareholders when they meet in Hamilton a week on Friday.

At the close of the NYSE last night Scottish Re?s shares were valued at $3.38.