Three former executives of Bermudan reinsurer RenRe have been charged by the US Securities & Exchange commission (SEC) with securities fraud for their alleged involvement in a finite reinsurance deal.

The allegations against James Stannard, Martin Merritt and Michael Cash claim that they structured and carried out a two part reinsurance transaction with Inter-Ocean Reinsurance Company to “smooth and defer more than $26 million of RenRe's earnings from 2001 to 2002 and 2003.”

Stannard was chairman and chief executive of RenRe from 1993 until he resigned in November 2005. Cash was a senior vicepresident of Renaissance reinsurance, a subsidiary of RenRe and Merrit held several positions, including that of controller.

Inter-Ocean, a Bermudan finite-risk reinsurer, previously managed by American Re, went into run-off in early 2005. The purpose of the two separate but related contracts, according to the complaint, was to “store excess earnings” so that RenRe could draw on them if the company incurred large losses in the future.