Fears for the future of Bermuda-based life reinsurer Scottish Re abated yesterday, after shareholders approved a $600-million take-over of the company by two investment institutions.

At an extraordinary general meeting at the Fairmont Hamilton Princess, the company's chief executive officer Paul Goldean announced that holders of just over 69 percent of voting equity had backed the deal. Approval of the moves necessary to facilitate the deal required the support of holders of two thirds of the company's shares.

Mr. Goldean had warned shareholders last week that a vote against the lifeline deal by MassMutual Capital partners and Cerberus Capital Management, each of which will invest $300 million, could have led to bankruptcy.

And that in turn created fears of a knock-on effect in the industry, as the life insurers covered by Scottish Re could have seen their insurance recoverables written down and become insolvent.

The company's stock lost around three quarters of its value on the New York Stock Exchange over the past year and its previous chief executive Scott Willkomm resigned in July after poor second-quarter results. But yesterday's news was greeted warmly by the markets and Scottish Re shares climbed 10.66 percent (42 cents) to close on $4.36.

"I'm pleased we got the shareholders' vote," Mr. Goldean told The Royal Gazette after the meeting. "It's been a very difficult eight months for the company. Now it's time for Scottish Re to get on and do what it was meant to do.

"We have not fully engaged on the future with the new buyers yet, as we had to wait for the shareholders' vote. The main thing now is to get Scottish Re back on its feet and to talk with our clients and the ratings agencies."

Only one shareholder actually attended yesterday's meeting, others voted by proxy. Mr. Goldean said holders of just over 69 percent of shares had voted in favour of the issue of preferred shares that will give MassMutual and Cerebus control of the company. Nearly 12 percent voted against.

Provided regulators approve the deal, the new majority owners will get a two-thirds stake of the company in a deal that values the shares at around $4.

Scottish Re employs 18 staff in its Bermuda office, based in Crown House, in Par-la-Ville Road, Hamilton. It also has operations in the UK and the US, as well as a presence in Ireland, the Cayman Islands and Singapore.

Last week, the company announced a full-year net loss of $368.3 million in 2006. And rating agency Fitch piled on the gloom last week when it downgraded Scottish Re's financial strength rating from BBB to BB+.

When reinsurance companies lose A ratings, finding clients and investors becomes much more difficult.

"If you are dependent on going to Wall Street for your capital, a downgrade is disastrous," Mr. Goldean conceded.

But the take-over deal would give Scottish Re "the capital base of a AA company at least", Mr. Goldean said, and the confidence the new owners had shown in the company would send a message to the ratings agencies.

"We have to put in a couple of quarters of good operational efficiency and establish a new line of communication with the ratings agencies," the CEO said.

"I'm confident we will get back our A rating, but I can't predict exactly when that will be.

"We've had an incredibly positive response from clients and we just closed two treaties in the UK last week. Our US company will start to pick up business and our UK international group will continue to write more business around the world."

The CEO said staff had stuck with the company.

"We have been engaged with Mass Mutual and Cerberus for these past few months with many employees dedicated to making this transaction work," Mr. Goldean said. "And they've done a great job of keeping the company together."

The loyalty of the company's employees had been mirrored by that of clients, Mr. Goldean said. "About two thirds of our business is with ING and they have stuck with us," he said.

As for what had gone so wrong that the company's share value had plummeted 50 percent since last July, Mr. Goldean said: "You've got to remember that this company doubled in size every year for three years in a row and we never really caught up with what we purchased." Some acquisitions had been good and others less so, he added.

Mr. Goldean admitted Scottish Re had been through a torrid time since he took over as chief executive. "It was great to have (chairman) Glenn Schafer and (vice-chairman) Bill Caulfeild-Browne there, working side by side with me to help the process. They are both well known in the industry and they helped greatly in getting this transaction done."

A major factor in gaining approval for the take-over was the support of private equity firm Cypress Group, owners of around 15 percent of Scottish Re, according to Reuters.

Some shareholders, however were firmly against the deal. Grace Brothers, for example, said it believed the value of Scottish Re would be higher "without this dilutive transaction".

One expert, speaking to Reuters yesterday, expected regulatory approval for the deal to come rapidly.

"These approvals could be the fastest in history," predicted Richard Sbaschnig, an analyst with Oppenheimer & Co. "Regulators do not want this to blow up."

Mr. Goldean said yesterday he hoped the deal could be closed by as soon as next month.