LONDON (Reuters) — Hannover Re, the world’s fourth largest reinsurer, has pulled out of bidding for the ailing Bermuda life reinsurer Scottish Re, a source familiar with the situation said yesterday.Hannover Re was one of six firms that were in the second phase of bidding for the Bermuda-based life reinsurer, but has now withdrawn from the process, the source said.

Some analysts had regarded the German firm as the likely frontrunner to buy its rival.

“It’s difficult to interpret this. It could simply mean that somebody else is now in the lead. I would think if there were problems with the (Scottish Re) business they would have dropped out earlier,” said Richard Sbaschnig, analyst at Oppenheimer & Co.

French reinsurer Scor may now be among the favourites to enter exclusive negotiations with Scottish Re over a possible sale, analysts said.

Scottish Re put itself up for sale in August following a big second-quarter loss and the departure of its chief executive and resulting liquidity crunch.

Earlier this month, the company said it had obtained $120 million in new financing to ease its liquidity problems, having earlier reduced some of its credit facilities at its operating companies.

Hannover Re declined to comment. Scor was not available for comment.

[bul] French reinsurer Scor could be leading the race to acquire Scottish Re Group Limited, according to The Financial Times Deutschland.

According to the newspaper, Goldman Sachs will be examining the bid offers received so far and a preliminary decision is expected by today.