SECOND AMENDED AND RESTATED FORBEARANCE AGREEMENT

Exhibit 10.67

SECOND AMENDED AND RESTATED FORBEARANCE AGREEMENT

          This Second Amended and Restated Forbearance Agreement (this “Agreement”) is entered into as of June 30, 2008 by and between HSBC BANK USA, NATIONAL ASSOCIATION (“HSBC”), SCOTTISH ANNUITY & LIFE INSURANCE COMPANY (CAYMAN) LTD. (“SALIC”), SCOTTISH RE GROUP LIMITED (“SRGL”) and SCOTTISH RE (DUBLIN) LIMITED (“SCOTTISH (DUBLIN)”).

RECITALS

          WHEREAS, SALIC and HSBC entered into (i) the 1992 ISDA Master Agreement, the Schedule thereto and the Credit Support Annex to the Schedule (collectively, the “Master Agreement”), each dated as of June 28, 2004 and (ii) the letter agreement (the “Confirmation”) confirming the terms of the total rate of return swap transaction, dated as of December 22, 2005;

          WHEREAS, HSBC, SALIC and Scottish (Dublin) entered into that certain Letter Agreement dated August 4, 2006 (the “August 4, 2006, Letter Agreement”);

          WHEREAS, HSBC and SALIC entered into that certain Forbearance Agreement dated September 1, 2006 (the “Forbearance Agreement”);

          WHEREAS, HSBC and SALIC entered into that certain Amended and Restated Forbearance Agreement dated November 25, 2006 (the “Amended and Restated Forbearance Agreement”), which amended and restated the Forbearance Agreement in its entirety and which is hereby amended and restated in its entirety by this Agreement;

          WHEREAS, in connection with the Master Agreement and pursuant to the terms of the August 4, 2006, Letter Agreement and this Agreement, HSBC currently holds Eligible Collateral as Credit Support under the Master Agreement in an amount equal to US$25,000,000 (the “Collateral”);

          WHEREAS, SALIC has requested, and HSBC has agreed, subject to the terms and conditions of this Agreement, to forbear from demanding any amounts of additional Eligible Collateral as Credit Support under the Master Agreement and the Confirmation during the period commencing on the date hereof and ending at 11:59 p.m. (Prevailing Eastern Time) on December 15, 2008 (the “Forbearance Period”) unless terminated earlier pursuant to Section 4; and

          WHEREAS, SALIC and HSBC agree that the execution of this Agreement shall not constitute a novation, discharge, extinguishment or refunding, nor is it to be construed as a release, waiver or modification of any of the terms, conditions, representations, warranties, covenants, rights or remedies set forth in the Master Agreement, the Confirmation or any other documents, except as expressly provided herein.

          NOW, THEREFORE, SALIC, SRGL, Scottish (Dublin) and HSBC hereby agree as follows:

     SECTION 1. Recitals . The recitals set forth above are hereby incorporated into this Agreement.

     SECTION 2. Defined Terms . Capitalized terms used but not defined herein shall have the meaning set forth in the Master Agreement and the Confirmation, provided that if terms are defined in both the Master Agreement and the Confirmation, the definition provided in the Confirmation shall control.

     SECTION 3. Collateral . SALIC and HSBC agree and acknowledge that HSBC shall continue to have rights pursuant to the Master Agreement and the Confirmation with respect to the US$25,000,000 which is currently held as Eligible Collateral as Credit Support under the Master Agreement. HSBC shall be entitled to take any action with respect to such amount as may be permitted under the Master Agreement and Confirmation.

     SECTION 4. Forbearance . Subject to the terms and conditions of this Agreement, including the timely remittance of amounts due pursuant to Sections 4.12, 5.10, 5.15, 5.16, 5.22, 5.23 and 5.24, HSBC agrees that during the Forbearance Period, HSBC will not seek to require the posting of, and/or make any request or demand for, any additional Eligible Collateral as Credit Support under the Master Agreement and the Confirmation. The Forbearance Period shall terminate if any of the events set forth in Section 4.1 through 4.15 has occurred.

     Section 4.1 Trigger Event . The occurrence after the date hereof of any trigger event (other than as a result of a downgrade by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. (“S&P”) or Moody’s Investors Services, Inc. (“Moody’s”) of the insurer financial strength rating assigned to SALIC or any of its affiliates), event of default or any early termination event (each as defined in the relevant agreement), under that certain Coinsurance Retrocession Agreement (Treaty Number 8074) effective as of December 22, 2005 (the “Coinsurance Agreement”), by and between Scottish (Dublin) and Scottish Re (U.S.), Inc. (“Scottish (U.S.)”), the Security Agreement dated December 22, 2005 (the “Security Agreement”) by and between Scottish (Dublin) and the STructured Asset Repackaged Trust II, 2005-A (the “STARTS Trust”), the Master Agreement, the Confirmation or the August 4, 2006, Letter Agreement.

     Section 4.2 Litigation . Any litigation, case, proceeding or similar action is instituted or brought against SALIC, SRGL or any of SRGL’s direct or indirect subsidiaries (collectively, the “Scottish Parties” and each a “Scottish Party”) (other than by HSBC under the Master Agreement) to collect upon or enforce any indebtedness equal to or exceeding US$25,000,000 of any Scottish Party that individually or in the aggregate, if determined adversely, would reasonably be expected to adversely affect the rights of or the ability to collect payment by HSBC or the STARTS Trust under the Covered Agreements.

     Section 4.3 Covenants . The failure by SALIC, SRGL or any of their respective affiliates to comply with any of the covenants contained in Section 5 of this Agreement.

     Section 4.4 Liquidity . The failure by SRGL or SALIC to maintain liquidity in accordance with the applicable liquidity requirements set forth on Schedule 4.4.

     Section 4.5 Bankruptcy . SRGL, SALIC, Scottish (Dublin) or Scottish (U.S.) (i) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing in a judicial, regulatory or administrative proceeding or filing its inability generally to pay its debts as they become due; (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (iv) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it; (v) has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); (vi) seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, rehabilitator, supervisor, trustee, custodian or other similar official for it or for all or substantially all its assets; (vii) has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets; (viii) voluntarily agrees to become subject to a consent order or other voluntary binding agreement that has the effect of a consent order with any regulatory authority; or (ix) causes or is subject to any event with respect to it which, under the applicable laws of any applicable jurisdiction, has an analogous effect to any of the events specified in clauses (i) to (ix) (inclusive).

     Section 4.6 Dividend Payments . SRGL or SALIC declares any cash dividend, return of capital, capital distribution or similar payment; provided that the foregoing shall not limit any such dividend, return of capital, capital distribution or similar payment solely made between SRGL and SALIC.

     Section 4.7 Contractual Rights Under Sale Agreements . SRGL fails to maintain in place one or more written enforceable agreements which provide for aggregate minimum sale net cash proceeds to be received by SRGL or SALIC on the date such sale is consummated of at least (i) US$6,000,000 in connection with the sale of its wealth management business (the “Wealth Management Business”) and (ii) US$65,000,000 in connection with the sale of its international life reinsurance business (the “International Business”).

     Section 4.8 Sales of Blocks of Business . With respect to SRGL’s sale of the Wealth Management Business, the International Business or its North America life reinsurance business (the “North America Business”), (i) SRGL is denied in writing any required consents or approvals for such sales, including, but not limited to, the approvals or consents of the shareholders of SRGL (“Shareholder Approval”), the approvals or consents of any relevant regulatory authority or any material third party or (ii) SALIC or SRGL amends or terminates any definitive documentation relating to such sales without the prior written consent of HSBC, if such amendments would reasonably be expected to adversely affect the rights of or the ability to collect payment by HSBC or the STARTS

Trust under the Covered Agreements.

     Section 4.9 Material Adverse Change . A material adverse change occurs with respect to SRGL, SALIC, Scottish (Dublin) or Scottish (U.S.) on or after the date of this Agreement that reasonably would be expected to adversely affect the rights of or the ability to collect payment by HSBC or the STARTS Trust under the Covered Agreements.

     Section 4.10 Formula Amount . Scottish (Dublin) fails to maintain in Reinsurance Trust Account A an amount at least equal to the sum of the Formula Amount (as defined in the Coinsurance Agreement) in accordance with the applicable provisions of the Coinsurance Agreement.

     Section 4.11 Other Obligations . Any Scottish Party fails to perform any of its obligations under or is not in compliance with any agreement or transaction to which it is a party, including, but not limited to, (i) in connection with the capital markets collateral facility with Stingray Investor Trust (the “Stingray Facility”), (ii) under any funding agreement issued in connection with any repackaging or resecuritization special purpose vehicle (“SPV”) (each, a “Funding Agreement Facility”) or (iii) relating to securitization transactions to fund Regulation XXX reserve requirements for business ceded by a Scottish Party and reinsured by Ballantyne Re plc (the “Ballantyne XXX Facility”), Orkney Re, Inc., Orkney Re II plc (the “Orkney II XXX Facility”), Clearwater Re Limited (the “Clearwater XXX Facility”) or any other party in a similar transaction and, in each case, (A) such failure would reasonably be expected to adversely affect the rights of or the ability to collect payment by HSBC or the STARTS Trust under the Covered Agreements or (B) such failure would constitute an event of default or event that with the passage of time or notice or both would constitute an event of default with respect to the Stingray Facility, a Funding Agreement Facility or the Clearwater XXX Facility.

     Section 4.12 Sale of Assets . Any Block of Business Sale (as defined in Section 5.10) or recapture by any Scottish Party of any block of business occurs which constitutes more than five percent (5%) of the associated United States statutory reserves attributable to the North America Business (as detailed on page 4, Tables 1 and 2, of the Actuarial Appraisal developed by the Scottish Parties in connection with the sale of the North America Business and attached hereto as Exhibit A), in any one or more related transactions without the prior written consent of HSBC, which consent shall be requested prior to the execution of the definitive documentation; provided that the foregoing limitation shall in no event prohibit the Scottish Parties from transferring the assets currently funded under and terminating the liabilities related to the Clearwater XXX Facility, in whole but not in part, including the underlying insurance policies and all payments due thereon to a third party (the “Clearwater Block”) without the consent of HSBC so long as (1) the aggregate amounts paid to the Clearwater Lenders (as defined below) and any third parties in connection with the termination of all of the liabilities related to the Clearwater XXX Facility do not exceed the current assets funded under the Clearwater XXX Facility, (2) such transfer and termination does not, in the aggregate, negatively impact the liquidity profile of SRGL or SALIC, (3) HSBC is notified within one (1) Business Day of the Scottish Parties agreeing to transfer the Clearwater Block,

including the terms and conditions thereof; provided, however, that such notification must actually be received by HSBC promptly but no later than 5 p.m. (Prevailing Eastern Time) on the Business Day before the consummation of such transfer or termination of the Clearwater Block and (4) HSBC shall receive, on the same day as such transfer or termination of the Clearwater Block is consummated, an amount of Eligible Collateral as Credit Support under the Master Agreement and the Confirmation equal to fifty percent (50%) of any and all amounts transferred or otherwise funded to the Clearwater Lenders or Clearwater Re Limited, whether as collateral, capital or any other type of payment made to the surplus account at Clearwater Re Limited, in connection with the Clearwater Forbearance Agreement (as defined in Section 4.13 below).

     Section 4.13 Clearwater Forbearance Agreement . The termination or amendment of the forbearance agreement with Citibank N.A. and Calyon New York Branch (together, the “Clearwater Lenders”) with respect to the Clearwater XXX Facility (the “Clearwater Forbearance Agreement”) prior to the end of the Forbearance Period, other than in connection with a termination and satisfaction in full, or assignment, transfer or other solution pursuant to which the Scottish Parties are relieved from continuing obligations to the Clearwater Lenders.

     Section 4.14 Representations . Any of the representations in Section 10 was not true when made.

     Section 4.15 RBC . Except with respect to contractual payments or contributions required pursuant to written agreements currently in effect as of the date hereof (unless as otherwise set forth in Schedule 4.15) of the types generally described on Schedule 4.15 of this Agreement (each such payment, a “Permitted Contractual Payment”), on or after July 31, 2008, SALIC or SRGL makes any payment or contribution, directly or indirectly, to (i) any special purpose reinsurance company or SPV (ii) (a) Scottish (U.S.), which payment or contribution would cause Scottish (U.S.)’s total adjusted capital to exceed one hundred fifty percent 150% of its company action level risk-based capital as determine pursuant to the laws of the State of Delaware (“CAL RBC”), (b) Scottish (Dublin), which payment or contribution would cause Scottish (Dublin)’s solvency margin to exceed one hundred fifty percent 150% of its targeted level, or (c) Scottish Re Life Corporation (“Scottish Re Life”), which payment or contribution would cause Scottish Re Life’s total adjusted capital to exceed one hundred seventy five percent 175% of its CAL RBC, in each case, as such total adjusted capital or funds available for solvency, as applicable, is based upon an estimated calculation determined in good faith and in accordance with the requirements set forth for such calculations by the applicable Scottish Party’s domiciliary regulatory authority, as of the date such funding is made; it being understood that no Scottish Party identified in this clause (ii) shall be obligated to reduce its capital to the extent that as of the date of this Agreement, such Scottish Party has capital in excess of the applicable percentage set forth in clauses (ii)(a) through (c) of this Section 4.15. For the avoidance of doubt, no capital contribution or other payment relating to reserve strengthening or cash flow analysis will be deemed a Permitted Contractual Payment for the purposes of this Section 4.15.

If the Forbearance Period has not been terminated prior to 11:59 p.m. (prevailing Eastern Time) on December 15, 2008, it shall terminate on 11:59 p.m. (prevailing Eastern Time) on December 15, 2008.

SECTION 5. SALIC Covenants . During the Forbearance Period, SALIC shall comply with the following covenants:

     Section 5.1 Delivery of Information . SALIC shall, and shall cause its affiliates to, furnish (i) promptly but not later than five (5) Business Days following the request to HSBC and its advisors and attorneys all information in the possession of SALIC or any of its affiliates reasonably requested by HSBC, and (ii) within a reasonable time, other summaries and reports as are reasonably requested by HSBC relating to (A) the financial condition, (B) regulatory matters and related correspondence, (C) litigation, (D) notice from the government of the United States or any other nation, or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) (each, a “Governmental Authority”), (E) sale process or (F) strategic direction, in each case, with respect to any Scottish Party. HSBC will send all requests under this Section 5.1 in writing to SALIC (such requests may be sent to HSBC.forbearance@scottishre.com with a copy to Gregg Klingenberg (such copy may be sent to gregg.klingenberg@scottishre.com ). SALIC shall provide a weekly summary of the status of the North America Business sale process, and SALIC shall provide a copy of the bids received in connection with such sale process within three (3) Business Days of receipt by any Scottish Party. SALIC shall provide HSBC with bi-weekly updates (which may be telephonic) regarding material litigation affecting SALIC, SRGL, Scottish (U.S.) or Scottish (Dublin); provided that, solely with respect to the bi-weekly updates regarding material litigation and solely to the extent a portion of the information furnished by SALIC to HSBC in connection therewith would reasonably be deemed to be covered by attorney client privilege (such information, the “Privileged Information”), unless HSBC enters into a specific confidentiality and common interest agreement in relation to such Privileged Information, in a form reasonably acceptable to HSBC and SRGL, such updates will be limited to the discussion of information other than Privileged Information. SALIC shall provide to HSBC notice within two (2) Business Days of any material changes with respect to the information covered under this Section 5.1.

     Section 5.2 Access to Data Room . On and after the date hereof, SALIC shall provide HSBC access to all information in any data room prepared and maintained for prospective purchasers of any Scottish Party; provided that HSBC hereby acknowledges that access to certain portions of any such data room or to certain documents therein may be made contingent upon the execution by HSBC of certain reasonably requested third-party consents or waivers. For the avoidance of doubt, the parties acknowledge that the Scottish Parties shall have no obligation to maintain any such data room for the purposes of this Agreement.

     Section 5.3 Bi-Weekly Liquidity Projections . SALIC shall, and shall cause

SRGL to, furnish liquidity projections substantially in the form of the current liquidity schedule provided to HSBC (a copy of which is attached as Exhibit B hereto) and information with respect to the variance of the most recent bi-weekly liquidity projection to the bi-weekly liquidity projection previously provided (i) promptly but not later than three (3) calendar days after any material change in the liquidity profile of SRGL or SALIC since the most recent liquidity projection delivered to HSBC and (ii) promptly but not later than every other Thursday of every calendar month beginning on July 3, 2008, showing updated liquidity projections with respect to SRGL and SALIC for the next succeeding twelve calendar months, certified by any of the chief executive officer, president, chief financial officer, executive vice president, treasurer, any director, manager or authorized officer (as appointed by the relevant board of directors) (each, a “Responsible Officer”) of SRGL or SALIC, and reviewed by a Responsible Officer of FTI Consulting, Inc. who has knowledge of and is familiar with matters relating to the liquidity of SRGL and SALIC, to the effect that such updated liquidity projections are fairly stated in all material respects; provided that, if such liquidity projections are not delivered as set forth in this Section, SALIC shall have a two (2) day cure period to remedy the non-delivery.

     Section 5.4 Forbearance Milestones . SALIC shall, and shall cause its affiliates to, (i) furnish to HSBC, promptly but not later than 11:59 p.m. (prevailing Eastern Time) on June 30, 2008, unaudited other-than-temporary impairment amounts for SRGL for the year ended and as of December 31, 2007, calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), and the resulting effects of such amounts on the liquidity of SRGL, (ii) file with the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions (the “SEC”), SRGL’s audited financial statements for the year ended December 31, 2007 and Annual Report on Form 10-K not later than 5 p.m. (prevailing Eastern Time) on July 15, 2008 with respect to SRGL, (iii) provide to HSBC, upon execution of this Agreement, unaudited financial statements prepared in accordance with GAAP for the year ended December 31, 2007 with respect to SRGL, (iv) provide to HSBC promptly but not later than 5 p.m. (prevailing Eastern Time) on July 31, 2008, audited financial statements prepared in accordance with GAAP for the year ended December 31, 2007 with respect to SALIC, (v) furnish to HSBC, promptly but not later than 5 p.m. (prevailing Eastern Time) on August 31, 2008, unaudited financial statements prepared in accordance with GAAP for the three month period ended March 31, 2008 with respect to SRGL and SALIC, (vi) furnish to HSBC, promptly but not later than 5 p.m. (prevailing Eastern Time) on September 30, 2008, unaudited financial information prepared in accordance with GAAP for the three month period ended June 30, 2008 with respect to SRGL and SALIC, (vii) furnish to HSBC, promptly but not later than 5 p.m. (prevailing Eastern Time) on November 30, 2008, the unaudited financial statements prepared in accordance with GAAP for the period ended September 30, 2008 with respect to SRGL and SALIC, (viii) furnish to HSBC, promptly but not later than 5 p.m. (prevailing Eastern Time) on July 15, 2008, a copy of the binding letter of intent entered into between certain Scottish Parties and one or more of ING North America Insurance Corporation, ING America Insurance Holdings, Inc., Security Life of Denver Insurance Company (“SLD”) and Security Life of Denver International Ltd (collectively, the “ING Parties”) to effect a

partial recapture and reinsurance transaction, effective as of June 30, 2008 (the “Recapture”), of the business ceded by Scottish (U.S.) to the Ballantyne XXX Facility, (ix) execute all definitive documentation and consummate the Recapture, promptly but not later than 5 p.m. (prevailing Eastern Time) on August 15, 2008 with an effective date not later than June 30, 2008, and permit HSBC to review any and all documentation relating to the Recapture, (x) furnish to HSBC, promptly but not later than 5 p.m. (prevailing Eastern Time) on September 30, 2008, a copy of the binding letter of intent entered into between certain Scottish Parties and one or more ING Parties to effect the assignment to SLD of Scottish (U.S.)’s interests in the reinsurance agreement and reinsurance trust agreement between Scottish (U.S.) and Ballantyne Re plc (the “Assignment Transaction”), (xi) execute all definitive documentation and consummate the Assignment Transaction, promptly but not later than 5 p.m. (prevailing Eastern Time) on November 15, 2008 with an effective date not later than September 30, 2008, and permit HSBC to review any and all documentation relating to the Assignment Transaction and (xii) execute all definitive documentation and consummate the Clearwater Forbearance Agreement on terms reasonably satisfactory to HSBC (including, for the avoidance of doubt, terms relating to any existing event of default under the Clearwater XXX Facility), promptly but not later than 11:59 p.m. (prevailing Eastern Time) on June 30, 2008, and, immediately upon the execution of this Agreement, furnish to HSBC a true, correct and complete copy of the Clearwater Forbearance Agreement.

     Section 5.5 Wealth Management Business Milestones . SALIC shall, and shall cause SRGL to, with respect to the sale of the Wealth Management Business, (i) obtain Shareholder Approval, if necessary, promptly but not later than 5 p.m. (prevailing Eastern Time) on July 1, 2008, (ii) obtain all required regulatory approvals and other required consents promptly but not later than 5 p.m. (prevailing Eastern Time) on July 15, 2008, and (iii) consummate such sales, and actually receive net cash proceeds from such sales of at least US$6,000,000 not later than 5 p.m. (prevailing Eastern Time) on July 15, 2008.

     Section 5.6 International Business Milestones . SALIC shall, and shall cause SRGL to, with respect to the sale of the International Business, (i) obtain Shareholder Approval, if necessary, promptly but not later than 5 p.m. (prevailing Eastern Time) on July 31, 2008, (ii) obtain all required regulatory approvals and other required consents promptly but not later than 5 p.m. (prevailing Eastern Time) on September 20, 2008, and (iii) consummate such sales, and actually receive net cash proceeds from such sales of at least US$65,000,000 (other than with respect to the International Business relating to SALIC, Singapore branch) not later than 5 p.m. (prevailing Eastern Time) on September 20, 2008.

     Section 5.7 North America Business Milestones . SALIC shall, and shall cause SRGL to, with respect to the sale of the North America Business, (i) obtain binding offers to purchase the North America Business by 5 p.m. (prevailing Eastern Time) on July 31, 2008, (ii) select a bidder