LONDON (Bloomberg) ? Platinum Underwriters Holdings Ltd., a Bermuda-based reinsurer, backed out of a contract that would have cut its $145 million in hurricane losses to avoid arousing regulators? concerns, a Wachovia Securities analyst said this week.

The arrangement ?could have been perceived as a tool to ?smooth earnings?,? Susan Spivak Bernstein, a Wachovia analyst in New York, wrote in a report to clients on Tuesday. The company concluded the contract failed to meet the requirement that reinsurance transfer risk onto another party, she wrote.

Platinum announced the decision to cancel the contract in its third-quarter earnings on Monday, and provided no details. The deal with a reinsurance unit of Warren Buffett?s Berkshire Hathaway Inc. would have reduced hurricane losses in the quarter by $22 million, according to J.P. Morgan Securities Inc.

The company?s decision shows that executives are reviewing how they do business in the wake of federal and New York state probes of the insurance industry. Regulators have begun questioning transactions, such as a contract insurer American International Group Inc. sold to Indianapolis cell-phone distributor Brightpoint Inc. in 1999.

The Securities and Exchange Commission accused American International and Brightpoint of fraud.

Both companies settled without admitting or denying wrongdoing, and AIG paid a $10 million fine. AIG has said it?s the target of a federal criminal investigation in Indianapolis scrutinising the same transaction. AIG said it?s cooperating and hopes to settle.

Platinum ended ?the agreement with Berkshire Hathaway, eliminating cause for regulatory, accounting or legal concerns,? David Sheusi, an analyst at J.P. Morgan Securities Inc., wrote in a report to clients.

The Wall Street Journal earlier reported Platinum said it backed out of the contract. Platinum executives said there was nothing wrong with the transaction, yet the company wanted to avoid possible increased scrutiny, the newspaper reported.