Court Approves $37.5 Million Settlement in the Matter In Re Scottish Re Securities Litigation

On December 11, 2008, the United States District Court for the Southern District of New York approved a $37.5 million settlement in the matter In re Scottish Re Securities Litigation, U.S.D.C. S.D. N.Y., Case No. 06-cv-5853 ("Scottish Re Litigation"). The Scottish Re Litigation was a securities fraud class action filed on behalf of a class of persons and entities who purchased or acquired Scottish Re Group Limited Ordinary Shares, Non-Cumulative Perpetual Preferred Shares, and/or Convertible Preferred Shares of Hybrid Capital Units between February 17, 2005 and February 20, 2007 (the "Class Period"). The Climaco Firm acted as co-counsel for the court-appointed Lead Plaintiff, the State Teachers Retirement System of Ohio.

In the Scottish Re Litigation, Lead Plaintiff alleged violations of both the Securities Act of 1933 and Securities Exchange Act of 1934. Specifically, Lead Plaintiff claimed that Scottish Re violated Generally Accepted Accounting Principles ("GAAP") by failing to properly account for its significant deferred tax assets. In addition to the alleged GAAP violations, the Company suffered from numerous, undisclosed internal control deficiencies. The Consolidated Class Action Complaint stated that when the true facts were revealed, including a material valuation allowance on deferred tax assets and numerous other required financial adjustments (revealing the Company's poor internal controls), the price of Scottish Re securities declined precipitously.

After Judge Scheindlin denied the defendants' motions to dismiss (with the exception of defendant Ernst & Young LLP ("E&Y") for whom leave to plead was granted), the parties engaged in lengthy settlement negotiations. Ultimately, the parties agreed to settle the case and executed a stipulation of settlement providing for a settlement amount of $37,500,000 to be paid to the class as follows: $31,000,000 in cash paid by Scottish Re and the individual defendants and $6,000,000 in cash paid by or on behalf of E&Y. On December 11, 2008, having received no objections to the proposed settlement, Judge Scheindlin approved the proposed settlement in the amount of $37,500,000.